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petitioners, as trustees for the Riago Trust, bought another home
in Edgewater; then they moved their family into that home. At
about this time, petitioners, as trustees for the Riago Trust,
sold the first two homes. A plaque on the front door of the home
bought in 1984 stated that the property was owned by the Riago
Trust.
A general ledger was maintained for Associates. When
Associates, as Robert's sole proprietorship, paid a personal
expense of petitioners, then that was recorded as a draw on
Associates' general ledger. On and after May 4, 1981, when the
Riago Trust owned Associates, such payments were shown on
Associates' general ledger and also on the Riago Trust's books as
payments by the Riago Trust, through Associates, for petitioners'
personal purposes.
During 1981 and 1982, Associates paid for a variety of
petitioners' expenses including jewelry, suntanning equipment,
scuba gear, private school tuition, record and tape clubs, a lawn
tractor, mortgage payments, home remodeling bills, utility bills,
real estate taxes, homeowner's insurance, clothing and household
bills, dry cleaning, groceries, toys, pet supplies, furniture,
donations, and medical bills. After petitioners moved to
Florida, a separate bank account was established for the Riago
Trust. From 1984 through 1987, the Riago Trust continued to pay
for petitioners' personal items and expenses.
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