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$1,600,000 of purported obligation was deducted on Sheldon's and
Nancy's 1981 tax return.
The attorney who marketed State Coal had met Nancy during
social occasions, but never discussed State Coal with her, and
Nancy was never present when the attorney discussed State Coal
with Sheldon. Sheldon did not tell Nancy of this investment
until late 1985, during a discussion about tax problems.
Nancy did not have signature authority on either of the
checking accounts that Sheldon used to make his State Coal
payments. Nancy never wrote any checks to the firm that marketed
State Coal, or any checks to anyone to buy an interest in State
Coal.
Nancy did not know of the State Coal investment or the
$1,600,000 deduction on the 1981 tax return until a long time
after the 1981 tax return was signed and filed.
Tax Returns and Refunds
Nancy filed joint Federal income tax returns with Sheldon
from 1974 through 1982. The 1981 tax return was filed on August
21, 1982. Table 1 shows the signature dates for the tax returns
from 1979 through 1982.
Table 1
Tax Year Signature Date
1979 June 11, 1980
1980 Oct. 9, 1981
1981 May 21, 1982
1982 Mar. 9, 1984
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