Linda S. Dillon - Page 4

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          business.  Petitioner worked part time at Dillon Securities                 
          during 1981 and 1982.  Her responsibilities involved essentially            
          pedestrian tasks, such as manually entering stock trades in the             
          ledgers and ordering lunches.                                               
               Dillon Securities prospered during the years at issue, and             
          this success is reflected in Mr. Dillon's salary.  Specifically,            
          Thomas Dillon's income from Dillon Securities was more than                 
          $1 million in 1981 and nearly $420,000 in 1982.  This income                
          allowed the Dillons to enjoy a high standard of living; for                 
          instance, the family lived in a home with a swimming pool.                  
          Further, the Dillons also owned a large number of "toys",                   
          including an airplane, a helicopter, 13 cars, a boat and several            
          snowmobiles.  Beginning in 1980, petitioner and Thomas Dillon               
          spent approximately $900,000 to purchase 40 acres of land on                
          Hangman Valley Road and built a house and barn on the property.             
          Also, during the years at issue, petitioner went on several                 
          family vacations including two trips to Hawaii, one trip to                 
          Mexico, and at least two ski trips to Sun Valley.                           
               Petitioner trusted Thomas Dillon.  During the years at                 
          issue, Thomas Dillon generally handled the finances while peti-             
          tioner took care of their two children.  Thomas Dillon maintained           
          a money market account (the Murphy Favre, Inc./Composite Cash               
          Management Company account, hereinafter the Murphy Favre                    
          account), and statements of the activity in the Murphy Favre                
          account were received by Thomas Dillon at Dillon Securities.  All           



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