Dennis C. Gandy - Page 30

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          and 60 percent of the tax liabilities for 1987 and prior years.             
          At the time of the agreement, petitioners’ 1987 tax return had              
          not been filed.  Petitioners each received physical custody of              
          one of their two children and visitation rights as to the other             
          Financial Statements and Federal Income Tax Returns                         
               1985 through 1987                                                      
               Petitioners engaged Shinn to prepare the nursery's financial           
          statements and their 1985 income tax return.  Mr. Gandy was                 
          interested in seeing how well the nursery was doing, i.e., what             
          the income and expenses were and determining what his tax                   
          liabilities would be based on that income.  Based on                        
          conversations with petitioners, Shinn assumed that all income was           
          being deposited into the nursery bank account and that all                  
          expenses were being paid by check.  Shinn informed petitioners              
          that he would be using the nursery bank account information to              
          prepare the financial statements and the tax return and that                
          income and expense items would have to go through the bank                  
          account to be picked up for tax return purposes.  Shinn used the            
          computer at his office to prepare the nursery's financial                   
          statements, based on the nursery's bank statements.  Shinn                  
          reviewed the financial statements with Mr. Gandy regularly                  
          throughout the year.  Mr. Gandy never brought to Shinn's                    

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