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for the preparation of his tax returns. Mr. Kelly prepared those
spreadsheets using as their basis the deposits and disbursements
into, and from, petitioner’s bank accounts. Petitioner did not
inform Mr. Brooks that the proceeds from his real estate
transactions were deposited into Mr. Miles’s law firm’s trust
account, that those proceeds were not accounted for on the
spreadsheets, that petitioner used trustees in his transactions,
or that petitioner had a Cayman Islands trust account.
Petitioner did not give to Mr. Brooks any books, records, or
closing statements from his real estate transactions. Petitioner
did not file timely his Federal income tax returns for 1977,
1978, 1979, 1980, and 1981. Petitioner did not file his Forms
1040 for those years until June 15, 1983.
Respondent audited petitioner for the 1977-1982 tax years,
and respondent issued a notice of deficiency for those years on
June 13, 1986.12 On September 12, 1986, petitioner filed a
petition with the Tax Court (docket No. 36958-86). In January
1988, petitioner and his representative met with respondent’s
revenue agent for purposes of resolving that case. Petitioner
took an active role in those meetings. Most of the real estate
transactions which were at issue for the 1977-1982 tax years
12Petitioner’s representative would not allow petitioner to
meet with respondent’s revenue agent assigned to examine his
returns or to extend the period of limitations, unless respondent
gave petitioner immunity from criminal prosecution.
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