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gave the broker an initial installment check from one of his
business checking accounts. Mr. Hendricks completed the purchase
by paying two additional installments over the next 2 years by
checks drawn on his business accounts. The partnership interest
in Boulder Oil and Gas was placed in Mr. Hendricks’s name alone.
Petitioner had no knowledge that Mr. Hendricks was making an
investment in Boulder Oil and Gas. Mr. Hendricks did not consult
petitioner about making the investment. Petitioner did not
receive any mail regarding Boulder Oil and Gas because all mail
from the partnership was sent to Mr. Hendricks’s business
address.
Just prior to Mr. Hendricks’s investment in Boulder Oil and
Gas, on January 31, 1980, Mr. Hendricks traded various pieces of
farmland that the Hendrickses had previously owned for 10
condominiums in Fort Collins, Colorado. The condominiums were
not acquired from proceeds made available through Mr. Hendricks’s
investment in Boulder Oil and Gas. The condominiums were owned
jointly by the Hendrickses.
During the relevant years, the Hendrickses relied upon Mr.
Grosser, who had promoted Boulder Oil and Gas, to prepare their
tax returns. Petitioner’s only involvement in preparing the tax
returns for the relevant years at issue was to complete a
questionnaire about personal and household expenses. Petitioner
relied on Mr. Hendricks to communicate with Mr. Grosser for the
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Last modified: May 25, 2011