Kathryn Cheshire - Page 6




                                        - 6 -                                         
          Petitioner’s Separation and Divorce                                         
               Mr. Cheshire was arrested several times for driving while              
          intoxicated (DWI).  In June 1993, he was involved in an alcohol-            
          related automobile accident. Approximately a month later,                   
          petitioner and Mr. Cheshire permanently separated; they divorced 17         
          months after their separation.                                              
              Pursuant to a divorce decree, Mr. Cheshire transferred to              
          petitioner his interest in the property constituting the family             
          residence and title to the 1992 Ford Explorer.  At the time of              
          transfer, the family residence and the Ford Explorer were                   
          unencumbered.                                                               
          The Cheshires’ 1992 Federal Income Tax Return                               
               Mr. Cheshire prepared and filed his and Mrs. Cheshire’s joint          
          income tax returns.  Mr. Cheshire prepared the Cheshires’ 1992              
          joint Federal income tax return (the 1992 return) in March 1993,            
          prior to beginning a jail sentence for a DWI conviction.  Before            
          signing the return, petitioner questioned her husband about the             
          potential tax ramifications of the retirement distributions.  Mr.           
          Cheshire falsely told petitioner he had consulted with a local              
          certified public accountant, J.D. Mican (Mr. Mican), and had been           
          advised that proceeds used to pay off the mortgage on their home            
          would reduce the taxable amount of the retirement distributions.            
          Accepting her husband’s answer, petitioner did not inquire further          
          and signed the 1992 return on March 14, 1993.  Petitioner assumed           






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