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accountants were surprised that the income was so high,
approximately $160,000 more than the accountants had
estimated.
In estimating petitioners' taxable income for 1988,
petitioners' accountants also took into account the
income from Mr. Harrison's interest in the cattle feeding
business, described above. Petitioner, Ms. Cates, and
Ms. Ruble all attempted to contact Mr. Gilmore prior to
April 15, 1989, in order to obtain information about
Mr. Harrison's income from the cattle feeding business for
1988, but they were unsuccessful.
Petitioners' accountants estimated that Mr. Harrison
had realized a loss from this business for 1988. This was
based upon the fact that losses had been realized in prior
years and upon a letter written by Mr. Gilmore to
Mr. Harrison in August 1988. In that letter, Mr. Gilmore
stated that the operations of the business during fall of
1987 and spring of 1988 had not gone well and that
Mr. Harrison's letter of credit had been exhausted and he
needed to pay approximately $64,600 to replenish the letter
of credit. Based upon that letter, petitioners and their
accountants believed that the operating results for 1988
would show a loss.
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