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several of these partnerships. Isaac generally withdrew funds
from a joint bank account owned by Lora and himself to make the
partnership investments, but the investments were made only in
the name of Isaac. Upon referral by Isaac, some of Isaac’s
clients also invested in the equipment leasing partnerships.
Isaac charged these clients fees for his advice relating to the
investments.
Specifically regarding Isaac’s investments in the equipment
leasing partnerships, Lora relied on Isaac’s accounting and tax
expertise. Occasionally, Isaac provided Lora with general
information about the equipment leasing partnership investments
he made. Lora was not familiar with the tax opinions that were
associated with the promotion of the equipment leasing
partnership investments and did not understand the “at risk”
rules of the Internal Revenue Code.
Petitioners timely filed their joint Federal income tax
returns for 1979, 1980, 1981, and 1982. Isaac prepared these
income tax returns and instructed Lora to sign the returns. In
each of these tax returns, Isaac claimed deductions for interest
expense and partnership losses relating to the equipment leasing
partnerships. Lora signed the tax returns even though she did
not understand the equipment leasing partnership transactions or
how they were reported on the tax returns.
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Last modified: May 25, 2011