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the market with an asking price of $3,950,000. The house, known
as "Dark Hollow", has been described in the book The Mansions of
Long Island, as "the most remarkable house on the east coast".
Petitioner purchased this residence around 1967.
Petitioner employed a live-in married couple to take care of
Dark Hollow during the years in issue. One of the caretakers,
Johnny Mongkauw, also served as petitioner's chauffeur, whom Mr.
Freidus paid in cash every week.
During the 1970s and 1980s, petitioner authorized or
consented to the formation of multiple corporations. Subsequent
to their formation, these corporations did not issue capital
stock, transact business, hire employees, or file tax returns.
Bank accounts were opened, and for a time maintained in the name
of some of these corporations. These corporations were merely
nominees; all income and expenses flowing therefrom were
chargeable to petitioner. Petitioner often paid personal
expenses from accounts in the names of her nominee corporations.
Prior to her marriage to Mr. Freidus, petitioner had never
incorporated her businesses.
Petitioner incorporated Ivory Ranch, Inc. (Ivory Ranch), a
nominee corporation, on January 12, 1978, in the State of Nevada.
Petitioner was its president and only officer. Ivory Ranch was
subsequently reincorporated in the State of New York on July 22,
1985. Petitioner was its president and sole shareholder.
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