John Van Heemst - Page 36

                                       - 36 -                                         
          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.                         



Page:  Previous  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  Next

Last modified: May 25, 2011