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shops.6 (The record does not establish the specific pieces or
amount of inventory that was stored at any of these places.)
Petitioners did not park automobiles in the garage, but they used
the garage to store items of inventory and for personal purposes
such as storing shovels, rakes, and tools unrelated to the shops.
Michelsen used another bedroom (approximately 225 square feet in
size) in the residence as an office where she performed some of
her work related to the shops. This bedroom was set up by
petitioners as an office, and it was not used for any other
purpose (e.g., it did not have any bedroom furniture). The
office had a computer which Michelsen used mainly for budgeting
and accounting purposes related to the shops; Michelsen did not
record the income and expenses of the Nature’s Touch shops on
paper (e.g., in a ledger) but recorded the information solely on
a program on the computer. The office also had a facsimile
machine and a telephone with two lines, the second line generally
devoted to the facsimile machine.
During 1997, the Nature’s Touch shops experienced dire
cashflow problems that required an immediate borrowing of cash.
On four occasions during that year, Michelsen informed LeBloch
that she needed cash to alleviate a cashflow problem of the
shops, and she asked LeBloch to lend her the necessary cash. On
6 Michelsen also kept in the guest bedroom closet “old
tapes” and “old credit card records”.
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Last modified: November 10, 2007