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petitioner’s son, was its owner in 1988 and 1989.16 Petitioner
showed the accountant the asset purchase agreement in which
Kathleen Murphy purportedly sold Pieces of Eight to Michael Van
Heemst. On the basis of that information, the accountant
prepared 1988 and 1989 returns for Michael Van Heemst that
reflected the income of Pieces of Eight. The accountant
subsequently learned that Pieces of Eight was owned by petitioner
and Ms. Murphy. A failure to be forthright with one’s return
preparer is an indication of fraud, Korecky v. Commissioner, 781
F.2d at 1568, as is the use of an alias, Lipsitz v. Commissioner,
21 T.C. 917, 937 (1954), affd. 220 F.2d 871 (4th Cir. 1955).
Petitioner also told respondent’s agent that Kathleen Murphy
owned Pieces of Eight from 1986 until the end of 1987. At first,
he claimed not to know her but later claimed that the name was an
alias used by Ms. Murphy. During the initial stage of the audit,
petitioner also told respondent’s agent that (1) he was merely an
employee of Pieces of Eight, (2) the agent was not to ask him any
questions about Pieces of Eight, and (3) the agent could not
visit its store. Petitioner also initially was unwilling to
provide Pieces of Eight’s records to respondent’s agent, but,
after the agent issued a summons, petitioner provided records,
16
Although some of petitioner’s conduct does not relate
directly to 1987, we may consider evidence of prior and
subsequent similar acts reasonably close to the years in issue in
deciding whether petitioner is liable for the addition to tax for
fraud. United States v. Johnson, 386 F.2d 630, 631 (3d Cir.
1967); Gruber v. Commissioner, T.C. Memo. 1995-230.
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