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testify on her behalf in that proceeding. Also, she was the
person who dealt with the insurance company after it initially
denied coverage for the loss of her house in 1982.
The record reflects that petitioner dealt with third parties
with respect to her family’s financial, tax, and legal matters.
For example, respondent’s revenue officer who was assigned to the
collection of the income tax liabilities of petitioner and Mr.
Hopkins testified that, except for one occasion, he dealt almost
exclusively with petitioner. When he would request information
or a response from petitioner and Mr. Hopkins, it was always
petitioner who would respond.
Petitioner performed numerous financial functions within her
family, exercised considerable discretion, and was ultimately
responsible for the family’s principal asset, the house at 111
Diablo Drive. She spent considerable sums in remodeling the
house before 1982 and in rebuilding the house after the mudslide
in 1982.14 Petitioner directed the remodeling and rebuilding.
She hired contractors, and she paid those individuals by check or
in cash.
Given the size of the partnership deductions, the change in
petitioner and Mr. Hopkins’s reported taxes in 1980, 1982, and
1983, and petitioner’s involvement in the family’s financial
14The rebuilt residence included four bedrooms and four
baths and occupied 4,976 square feet with a four-car, 920-square-
foot carport.
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