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Eight”, which was a retail jewelry store located in Captiva,
Florida. In order to hide his assets from creditors, petitioner
claimed that Kathleen Murphy owned Pieces of Eight. Kathleen
Murphy, the sister of Ms. Murphy, never had an ownership interest
in Pieces of Eight and had nothing to do with the business.
Petitioner maintained the books for Pieces of Eight. During the
years in issue, a checking account was maintained for Pieces of
Eight with Citizens and Southern National Bank. During the years
in issue, petitioner issued checks on the account of Pieces of
Eight to pay personal expenses.
During 1987, petitioner informed Thomas Louwers, the
accountant who prepared petitioner's and Ms. Murphy's return for
that year, that Kathleen Murphy, who Mr. Louwers understood to be
Ms. Murphy's sister, owned Pieces of Eight. Petitioner also
informed Mr. Louwers that petitioner was only an employee of
Pieces of Eight. Petitioner provided Mr. Louwers with an asset
purchase agreement (asset purchase agreement) in which Kathleen
Murphy purported to sell the assets of Pieces of Eight to Michael
Van Heemst, petitioner’s son, as of the end of 1987. Michael Van
Heemst was then a high school student and part-time employee of
Pieces of Eight. Michael Van Heemst signed the asset purchase
agreement at the insistence of petitioner. None of the sale
price was ever paid. Petitioner informed Mr. Louwers that
Michael Van Heemst owned Pieces of Eight for years after 1987,
and Mr. Louwers prepared 1988 and 1989 income tax returns for
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