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preparation of their tax returns. When Mr. Hendricks brought
home the income tax returns prepared and signed by Mr. Grosser,
petitioner would sign them in reliance on the accountant’s and
her husband’s recommendations to sign. Except for the years they
reported loss activity from Boulder Oil and Gas, i.e., 1980-83,
the Hendrickses have neither had their Federal tax returns
examined, nor have they had taxes in excess of the amount
reported on their returns assessed. The Hendrickses claimed
$158,521 in losses arising from Boulder Oil and Gas on their
joint 1983 tax return on Schedule E, Supplemental Income and
Loss. This amount did not appear on the face of the return, but
was listed on Schedule E, combined with the income and expenses
of at least 11 other properties, including the condominiums and
an office building.
On September 10, 1985, respondent sent the Hendrickses a
Form 4549, Income Tax Examination Changes, which reflected
proposed changes to the Hendrickses’ joint Federal income tax
returns for 1980-83. This was the first time petitioner learned
of Mr. Hendricks’s investment in Boulder Oil and Gas. On October
11, 1985, the Hendrickses received a notice of deficiency for
1980-82. The Hendrickses failed to petition the Court for
redetermination of the deficiencies set out in the notice of
deficiency and consented to an extension of the assessment date.
On June 10, 1987, respondent assessed the following amounts as
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