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Petitioner maintained two bank accounts at Amerifirst Bank
(Amerifirst), one in his name and one in his son’s name, and
petitioner maintained one bank account at Commercial Bank & Trust
Co. (Commercial Bank) in his name. Petitioner generally
deposited commissions and fees received in his loan brokerage
business into these bank accounts.
In connection with preparation of his 1986 Federal income
tax return, petitioner submitted to his tax return preparer a
letter dated February 21, 1987, in which petitioner indicated
that he received in 1986 only $10,482 in total commissions and
fees from his loan brokerage business. This total commission and
fee income of $10,482, along with net income of $2,227, and zero
taxable income, were reported on petitioner’s 1986 Federal income
tax return.
On March 15, 1988, respondent's revenue agent began an audit
of petitioner's 1986 Federal income tax return. During the
audit, petitioner did not keep scheduled appointments with
respondent’s revenue agent, and petitioner provided only limited
records to the revenue agent with regard to his loan brokerage
business.
On April 20, 1988, as a result of his inability to meet with
petitioner and petitioner's general lack of cooperation,
respondent’s revenue agent proposed audit adjustments against
petitioner in which the revenue agent disallowed $8,332 in
various claimed business expenses and proposed the negligence
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