Richards Asset Management Trust, et al. - Page 4

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          Return for Estates and Trusts (trust return), for each of the               
          taxable years 1996 and 1997.  In separate Schedules K-1, Benefi-            
          ciary’s Share of Income, Deductions, Credits, etc., that Richards           
          Management Trust included with each of its 1996 and 1997 trust              
          returns, Richards Management Trust showed Mr. Richards and                  
          Richards Charitable Trust as beneficiaries and Mr. Richards as              
          the fiduciary of Richards Management Trust.                                 
               In each of its 1996 and 1997 trust returns, Richards Manage-           
          ment Trust deducted depreciation with respect to certain personal           
          assets of Mr. Richards, including Mr. Richards’ personal resi-              
          dence that he had transferred to Richards Management Trust at a             
          time that is not disclosed by the record.  Richards Management              
          Trust also deducted other amounts in its 1996 and 1997 trust                
          returns with respect to personal expenses of Mr. Richards.                  
               During respondent’s examination of Richards Management                 
          Trust’s 1996 and 1997 trust returns and thereafter, no books,               
          records, or other information was provided to respondent estab-             
          lishing (1) the jurisdiction under the laws of which Richards               
          Management Trust was purportedly organized, (2) the person who is           
          authorized to act on behalf of Richards Management Trust, and               
          (3) that Richards Management Trust was at all relevant times a              
          trust cognizable for Federal tax purposes.  Nor did Richards                
          Management Trust at any time provide any books, records, or other           
          information to respondent establishing the income reported and              

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