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petitioners' personal checking account and paid all of the
household bills, including the mortgage and utility payments.
Prior to the period at issue, Mrs. Zaban held various employment
positions, including rater for insurance policies, receptionist at
a nursing home, salesclerk at a department store, and interior
decorator.
A. Business Interests of Mr. Zaban
During 1985 and/or 1986, Mr. Zaban was a shareholder in the
following entities: G&Z Corp., doing business as the Parlay Cafe
(1985 through 1990); Graymar Co., Inc., which sold business
equipment and supplies (1986 through 1990); Putty Hill Printing,
Inc., which provided printing and copying services (1985 through
1990); and OPCZ, Inc., doing business as Zingaro's restaurant (1985
through 1987).
In 1986, upon the recommendation of Francis E. Fidati, CPA,
petitioners' personal and business accountant, Mr. Zaban formed and
was the sole shareholder of Zaban Enterprises, Inc., a subchapter
S corporation, for the purpose of paying himself a salary, as well
as distributions, from interests in his other business entities.
Mrs. Zaban was an officer of Zaban Enterprises; she signed
corporate employment and income tax returns, signed the election to
become a subchapter S corporation, maintained the corporate
checking account, and wrote substantially all the checks from that
account.
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