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disclosed on petitioners' 1988 and 1989 tax returns. In
preparing petitioners' tax returns for the years 1986, 1987,
1988, and 1989, Mr. Sweet specifically asked whether petitioner
had any foreign bank accounts. Mr. Sweet never told petitioner
that the interest earned from Canadian accounts is not taxable
until it is withdrawn.
John Glancey is a stockbroker and financial adviser who
provided services for petitioner for approximately 12 years,
including the period from 1986 through 1990. Over this time
period, Mr. Glancey had significant dealings with petitioner,
which included discussions involving foreign interest rates and
foreign investments. Mr. Glancey found Dr. Kalo to have a better
than average knowledge about these types of investments.
Petitioner did not inform Mr. Glancey that he had an interest in
foreign bank accounts.
In the August 23, 1990, interview, petitioner told special
agents that he was told by an unnamed bank official at an unnamed
Canadian bank that he did not have to pay taxes. It is not the
policy of the Royal Bank of Canada to give advice to a
nonresident about the taxability of the interest for United
States tax purposes.
OPINION
The addition to tax in the case of fraud is a civil sanction
provided primarily as a safeguard for the protection of the
revenue and to reimburse the Government for the heavy expense of
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