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accountant at Touche Ross, after reviewing the financial package
concerning the investment in Supertaps, did not express any
objections relating to the investment. Petitioner attended the
meeting in 1981 in which Thomas Dillon and the accountant from
Touche Ross discussed the investment in Supertaps. In their
1981, 1982, and 1983 Federal income tax returns, petitioner and
Thomas Dillon reported losses from this investment of $77,739,
$115,782, and $107,104, respectively. However, in 1985
petitioner and Thomas Dillon reported partnership income of
$128,924.
During 1981 and 1982, Thomas Dillon maintained a money
market account with Murphy Favre. The statements were received
by Thomas Dillon at Dillon Securities, and petitioner was not
listed as a signatory on the account. The balance in the account
varied between $600,000 and $800,000. In 1981, petitioner and
Thomas Dillon reported income from this account of $22,517. In
1982, the Dillons earned $43,158 in income from this account, but
this income was mistakenly omitted from their 1982 Federal income
tax return.
Petitioner and Thomas Dillon's 1981 Federal income tax
return was prepared by accountants at Touche Ross. Petitioner
and Thomas Dillon attended a meeting at Touche Ross to review and
sign their return. The accountants at Touche Ross discussed ways
in which the Dillons could reduce their Federal income tax
liabilities. Petitioner did not review the return before signing
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