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Layland, and she did not find it unusual that petitioner’s father
handled the tax matters because that type of situation occurred
with other clients.
Ms. Layland was often frustrated by the inadequate and
inaccurate tax preparation records petitioner’s father submitted
to her. For example, the cashflow statement for K&L Exteriors
for the taxable year 1993 reflected gross receipts of $160,397,
while the Forms 1099 filed by clients of the business reflected a
lesser amount ($111,516). Through communications with
petitioner’s father, Ms. Layland came to realize that the
cashflow statement figure was incorrect. Accordingly, she
reported the amount reflected on the Forms 1099. Petitioner’s
father also commingled petitioner’s personal and business
expenses, which Ms. Layland attempted to distinguish and
separate. Ms. Layland did not contact petitioner about any of
these matters. She dealt exclusively with petitioner’s father,
who resolved these matters to Ms. Layland’s satisfaction. On one
occasion, Ms. Layland questioned petitioner’s father about a loss
on petitioner’s 1993 Schedule C, Profit or Loss From Business.
Petitioner’s father responded with new figures which reflected a
small profit.
For taxable years 1993 and 1994, Ms. Layland also prepared
Four Square’s corporate returns for petitioner. Because Four
Square was incorporated solely for K&L Exteriors’ payroll
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Last modified: May 25, 2011