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On March 8, 1990, InTex sold the stock back to Bonneville Pacific
for $1,299,993.
In 1989, pursuant to a resolution of its board of directors,
InTex agreed to pay Mr. Haymond a commission of $330,000 for his
part in arranging the transfer of InTex's interest to Bonneville
Pacific. InTex did not pay the commission in 1989, in 1990, or
in any subsequent year up through the time of trial.
Mrs. Haymond knew that InTex had sold its interest in the
project but did not know any of the financial aspects of the
transfer of InTex's interest in the project or that InTex sold
the Bonneville Pacific stock in 1990. She did not read the
resolution when signing it; it was one of many documents she
signed that day. Mrs. Haymond was not aware that Mr. Haymond was
to receive the commission.
Petitioners employed J. Niel Strong (Mr. Strong), a
certified public accountant (C.P.A.), to complete both their
personal Federal income tax returns and those of InTex. Mr.
Strong has had his C.P.A. license since 1973. He has been
petitioners' accountant for approximately 10 years. About 33 to
40 percent of Mr. Strong's practice consists of preparing tax
returns.
The financial records of InTex consisted of a check register
containing copies of the checks, deposit slips, and bank
statements. These records were kept by Mr. Haymond until he
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