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how he prepared petitioners' 1987 return. Mr. Dennett gave him a
six-page summary (1987 summary) that covered at least certain
expenses of Design Consultants for 1987 and certain income,
including $30,000 of rental income from the Seabrook property,
and certain expenses of petitioners, including all expenses with
respect to the Seabrook property, for that year. The 1987
summary did not include information with respect to Design
Consultants' receipts for 1987. All of the income amounts and
virtually all of the expense amounts that were included in the
1987 summary were reported in petitioners' 1987 return. Ms.
Olbres indicated to Mr. Kaply at the September 1989 meeting that
she gave Mr. Dennett the 1987 summary in connection with the
preparation of petitioners' 1987 return.
After the September 1989 meeting, Mr. Kaply prepared a
memorandum covering the answers that petitioners and Mr. Dennett
provided to his questions during that meeting. In that memoran-
dum, Mr. Kaply indicated that petitioners' 1987 return was
prepared by Mr. Dennett from "books and schedules" prepared by
Ms. Olbres. Mr. Kaply's reference to "books and schedules" was
to the 1987 summary that Ms. Olbres provided to Mr. Dennett.
After the September 1989 meeting, Mr. Dennett wanted to make
certain that the 1987 return that he had prepared and that was
filed for petitioners was accurate. In this connection, peti-
tioners provided Mr. Dennett with certain written materials
relating to 1987 that he did not have previously, including the
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