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of $316,085 for a profit of $20,902. Mrs. Bronson also had a
partial college education, with no courses in economics, finance,
or taxation, and she had limited investment experience.
Mr. Trimboli began doing work for the Bronsons approximately
3 years prior to 1983. The Bronsons were clients of Bugni,
LaBanca & Paduano, and Mr. Trimboli had assisted in preparing
their tax returns. The Bronsons were aware that Mr. Trimboli
received commissions for selling interests in Arid Land as well
as other investments. In December 1983, the Bronsons purchased
seven units in Arid Land through Mr. Trimboli for a total of
$7,700 in cash and a promissory note of $11,550.
The Bronsons filed a joint Federal income tax return for the
taxable year ending February 28, 1984. On this return, they
reported the following amounts of income and loss:3
Business income $37,138
Interest income 1,030
Dividends 603
Capital gain distribution 78
“Management fee” income 825
Partnership income 411
Subtotal 40,085
Arid Land loss (17,369)
Total income 22,716
Laura DiTommaso, an accountant at Bugni, LaBanca & Paduano and a
colleague of Mr. Trimboli, was listed as the return preparer on
3We use the terms “income” and “loss” primarily to reflect
the items reported on the “income” section of the Form 1040, U.S.
Individual Income Tax Return, filed by petitioners. We use this
terminology rather than the more technical terminology of the
Internal Revenue Code because these are the amounts reflected on
the faces of the returns which petitioners signed.
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