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the fee. Petitioner gave Mr. Scott the receipts and checks. For
most years, Karnival Klassics broke even or made a small profit.
Mr. Scott once told petitioner that Karnival Klassics had a loss
for the year and that they could deduct a loss for only 3 years.
Mr. Scott handled the family finances and dominated the
family. He told petitioner the number of exemptions to claim for
her withholding. The Scotts had a joint checking account they
used to pay household expenses. Mr. Scott controlled and
balanced the account. The Scotts did not live well, and money
was always tight. They had modest furnishings and vehicles, and
they never owned a home.
Mr. Scott prepared their joint Federal income tax returns
for 1975 through 2000, all the tax years of their marriage. Each
year, on or before the April 15 due date, Mr. Scott would place
the Federal and State returns before petitioner and instruct her
exactly where to sign each return. Petitioner did not fill in
the date next to her signature; Mr. Scott did.4 Because Mr.
Scott was an accountant and provided bookkeeping records and
services and prepared tax returns for others, petitioner trusted
him to properly complete their tax returns, and she did not
review them. She did not look to see whether they owed tax or
were due a refund. She did not know that Mr. Scott filed some of
4The dates on the Federal tax returns are in Mr. Scott’s
handwriting.
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Last modified: November 10, 2007