Lance Brown - Page 3

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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              
               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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