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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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Last modified: May 25, 2011