Ella Freidus - Page 6

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               Petitioner paid Annette Pores an annual salary of $8,000 for            
          clerical services rendered for the taxable years 1987, 1988,                 
          1989, and 1990.                                                              
               Petitioner maintained records of her finances in an office              
          located at the Dock Hollow property.                                         
               On or about September 1, 1988, the United States filed suit             
          to collect the deficiencies determined by the Tax Court in                   
          Freidus v. Commissioner, T.C. Memo. 1979-507, in which Mr.                   
          Freidus was the petitioner.  During 1989, the United States                  
          sought to depose Jacob Freidus and to examine documents in his               
          possession that described his income and assets.  Mr. Freidus                
          resisted the efforts of the United States and the United States              
          was forced to seek the District Court's assistance in conducting             
          discovery.  The United States also sought documents and                      
          deposition testimony from petitioner.                                        
               As a result of the District Court's order and subpoena                  
          issued to petitioner, three file cabinets and 43 boxes of records            
          were transferred from her home and delivered to the office of her            
          attorney beginning on February 23, 1990, at a rate of no more                
          than two or three boxes per week.  These records were copied and             
          delivered to the United States, except for approximately 1,900               
          documents which petitioner claimed were privileged under the                 

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