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Sometime during or before 1984, the IRS initiated an
investigation of ASI. As part of that investigation, an IRS
special agent (Balash) examined petitioner's returns for the
taxable years at issue. Balash met with Tubre on at least two
occasions during the course of her investigation. On one
occasion, Tubre informed Balash that petitioner "serviced"
various accounts for Besco and that Besco’s payments to
petitioner resulted from such service.4 This information was
false, and Tubre knew of its falsity at the time he told it to
Balash.
On December 20, 1984, Balash met with petitioner. During
the course of that meeting, petitioner represented to Balash that
the income he received from Besco was in exchange for services he
had provided Besco in the form of soliciting business or
providing leads. In making such representations, petitioner
referred to several of Besco’s customers and indicated that he
had made contact with certain individuals within those
organizations in his efforts to market Besco's products.
As noted earlier, petitioner reported the income he received
from Besco on his tax return for each taxable year at issue.
4It is not clear from the record what activities were
involved in the alleged "servicing" by petitioner. The arguments
advanced by both parties, however, suggest that such activities
entailed providing leads to and soliciting business on behalf of
Besco.
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