Conrad Janis and Maria G. Janis - Page 10

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          inventory at the end of 1990 was $12,354,316.  Thus, the gallery            
          reported that its COGS for 1990 was $48,891.  After subtracting             
          returns and allowances, COGS, and its expenses from its amount of           
          gross receipts and sales, the gallery reported a net loss of                
          $516,223 for 1990.  This loss was carried through to the trust’s            
          fiduciary income tax return for 1990 and caused the trust to                
          report a net operating loss for that year.                                  
               Silverman prepared the trust’s fiduciary income tax returns            
          for 1991 and 1992 in similar fashion.  On the Schedule C attached           
          to the trust’s fiduciary income tax return for 1991, the gallery            
          reported that its COGS was $1,235,185 and that its operations               
          generated a net loss of $432,229.  This loss was carried through            
          to the trust’s fiduciary income tax return for 1991 and, along              
          with the trust’s net operating loss for 1989 and a portion of the           
          trust’s net operating loss for 1990, offset the income that the             
          trust earned that year.                                                     
               On the Schedule C attached to the trust’s fiduciary income             
          tax return for 1992, the gallery reported that its COGS was                 
          $35,000 and that its operations generated a net loss of $652,797.           
          This loss was carried through to the trust’s fiduciary income tax           
          return for 1992 and caused the trust to report a net operating              
          loss for that year.                                                         
               On or about February 19, 1994, Silverman prepared amended              
          fiduciary income tax returns for the trust for 1990, 1991, and              






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