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Mr. Miles held properties in land trusts, which we refer to
as the Mefford Property (OS-22) and Susan’s Lakefront Estate (OS-
03). Mr. Miles, as trustee, applied for and received an employer
identification number for those land trusts. Respondent
requested tax returns from Mr. Miles for the land trust holding
the Mefford Property for 1985, 1986, and 1987. Respondent also
requested tax returns from Mr. Miles for the land trust holding
Susan’s Lakefront Estate for 1984, 1985, and 1986. Mr. Miles
discussed with petitioner this latter request. Mr. Miles
informed respondent that the trusts were not required to file
returns because each of the beneficiaries had filed a return and
reported his or her share of the income.10
In 1985-88, petitioner was a shareholder and officer in
Frank’s Corner, Inc., which operated a bar and lounge (Island
Living, Inc.), a furniture import business, and Waltin
Investments, Inc. Petitioner was also a shareholder in Medlin
Investment Co., Michigan Avenue Car Wash, Majestic Oaks, and
Cheyenne Social Club. During the tax years at issue, petitioner
owned approximately 25 Ferrari automobiles. Petitioner did not
sell any of those Ferraris during 1985-88.
On December 17, 1985, petitioner sold a piece of property to
Fred Brunson for $5,000. The quitclaim deed that petitioner or
10Mr. Miles testified that he supposed that he got this
information from petitioner.
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