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Bradley. The return showed no wage income, interest income of
$48,721, adjusted gross income of $79,518, itemized deductions of
$162,312, and zero tax owing.
The IRS began the audit of petitioner's 1990 and 1991
Federal income tax returns in 1992. Petitioner's responses to
the auditing revenue agent's information requests were
inadequate. The revenue agent was informed by Esquivel that
petitioner was working in Mexico and had sold some companies in
Mexico. Esquivel subsequently informed the agent that she had
been advised by Bradley and Nina Henderson (Henderson),
petitioner's attorney, not to provide any information to the IRS.
During the audit, the revenue agent was informed by petitioner or
petitioner's representative that the source of petitioner's
income was loans from Mexico. That explanation was contradicted
by Boldt, who informed the agent that there were no loans from
Mexico. In 1994, Bradley provided the agent with documents that
were represented to substantiate the loans. The documents were
in Spanish and consisted of a ledger sheet from a Mexican company
that listed loans to petitioner from December 1989 through
December 1990 of approximately 3,085,342,000 pesos; a promissory
note from petitioner to the Mexican company for 3,085,342,000
pesos dated December 1, 1990; and two invoices for interest due
to the Mexican company on the promissory notes. The invoices
were dated December 1990 and January 1992, numbered 008 and 017,
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