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(First Albany). In 1995, petitioner and his former spouse opened
college education funds with First Albany for the benefit of
their children (education accounts). An investment manager
managed the education accounts and invested the funds solely in
mutual funds. Any income earned in the education accounts was
reinvested in the respective education account.
In 1999, petitioner deposited into the education accounts
the proceeds received from the sale of his mortgage banking
company in 1998 or 1999, which proceeds comprised most of the
balance in the education accounts. Between 1995 and 1999, the
education accounts did not earn substantial dividends or capital
gains. Petitioner and his former spouse did not make any
contributions to the education accounts in 2000.
In 1999, petitioner moved out of the marital residence
located in East Aurora, New York (Aurora home), and moved to a
townhouse in Almond, New York. Petitioner and his former spouse
divorced in July 2000.2 At the time of the divorce, the children
continued to reside with petitioner’s former spouse at the Aurora
home, and petitioner resided on Clarendon Place, Buffalo, New
York (Clarendon address).
With respect to the children’s college education, a property
settlement and separation agreement pertaining to petitioner’s
divorce, stated in pertinent part:
2 In 2000, the children were ages 17, 13, and 10.
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