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in bankruptcy in October 1983.15 Their 1986 financial statement
indicates that petitioners owned valuable furs and jewelry.
These expenditures appear inconsistent with the amounts
petitioners reported on their tax returns and would have alerted
Mrs. Streck to the fact that there were understatements of income
15In his October debtor's petition filed in the U.S.
Bankruptcy Court, Mr. Streck listed debts of $1,999,678 and
assets of $548,994. A financial statement prepared by
petitioners' accountant, a C.P.A., based on information received
from petitioners, reflects petitioners' assets and liabilities as
of Sept. 30, 1986, as follows:
Assets
Cash and cash equivalents $36,600
Investments, nonmarketable 1,408,000
equity securities
Residence 770,000
Automobile 54,500
Furs, jewelry, household items, 200,000
etc.
$2,469,100
Liabilities and Net Worth
Income taxes, current year $500,000
balance
Notes payable, financial 817,800
institutions
Estimated income taxes, on 215,000
the difference between the
estimated current values of
assets and the estimated
current amounts of liabilities
and their tax bases
Net worth 936,300
$2,469,100
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