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Petitioners filed a Form 2688, Application for Additional
Extension of Time to File U.S. Individual Income Tax Return dated
August 9, 1991, requesting an additional two-month extension of
time to file their 1990 return. That application indicated that
petitioners needed the additional time to "collect and summarize
the information necessary to file an accurate return." That
application was not signed by petitioners, was signed by "Edward
A. Cronick CPA" as preparer of the application, and was sent to
the Service.
Petitioners filed a Federal income tax return for 1990 dated
October 14, 1991. In that return, petitioners reported total
salaries of $359,962. The portion of those reported salaries
that was attributable to petitioner's legal practice was
$349,000. In their 1990 return, petitioners reported a loss of
$48,082 attributable to petitioner's rental activity at Crest-
wood. Petitioners used that reported loss of $48,082 to offset
other income reported in their 1990 return. Petitioners' 1990
Federal income tax return showed a tax liability of $70,742.
That return was signed by petitioners as taxpayers and was signed
by "Edward A. Cronick, CPA" as return preparer.
Petitioner did not have any formal tax or accounting train-
ing. However, petitioner was a sophisticated businessman and had
been involved in several tax shelters that were challenged by the
Service. In addition, during the board meeting held in January
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