George R. and Barbara H. Burrus - Page 10

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          conducting Maple Row’s operations.  Mrs. Burrus, who was                    
          responsible for writing checks and preparing the ledger, would              
          generally obtain information necessary for this purpose from Dr.            
          Burrus and Mr. Gruen.  The ledger recorded the expenditures of              
          the Maple Row operations, as well as its income, such as from               
          sales of cattle,5 from the rental of the houses on the Maple Row            
          properties, and from tobacco allotments.  The ledgers also                  
          recorded as “income” certain cash transfers from other bank                 
          accounts controlled by petitioners, including accounts used for             
          Dr. Burrus’s medical practice and a shopping center owned by                
          petitioners.  At the end of each year, Mrs. Burrus gave the                 
          ledger and checks to petitioners’ accountant.  Petitioners’                 
          accountant prepared petitioners’ returns for each of the years in           
          issue.  The accountant would check the ledger against the checks,           
          and make inquiries of Mrs. Burrus to prepare the returns.  During           
          the years in issue, petitioners did not have financial statements           
          prepared for Maple Row, nor did they seek advice from any outside           
          management or agricultural consultant regarding Maple Row.                  
          Petitioners’ accountant did not advise petitioners regarding                


               5 The entries for cattle sales sometimes specified the                 
          number and gender of the animals sold and sometimes did not.                
          Where specified, the ledgers in evidence recorded bull sales                
          ranging from $1,847 to $2,100 per bull, and heifer sales at $850            
          per heifer.                                                                 





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