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failure to document his transactions cannot be attributed to
inadvertence or mere negligence in the setting of this case.
Petitioner made misrepresentations to respondent's agent during
the conduct of the audit. He also reported a transaction
reflecting nonrecognition of gain from the sale of two parcels of
realty which he knew to be incorrect and deceptive. The
purported section 1031 item involved a series of steps designed
to falsely defer gain on transactions which did not meet the
requirements of the statute. In addition, the information
supplied to the preparer as reflected in the return was, to
petitioner’s knowledge, incorrect and misleading.
Petitioner contends that he relied on his return preparer
regarding these matters, including the section 1031 exchange.
His return preparer, however, simply reported the information
provided by petitioner. In that regard petitioner knew that the
lot 2160 property was of nominal value and, still, he provided
the return preparer with information reflecting that the fair
market value of the exchanged property (lot 2160) was $305,000.
The amount of value provided was designed to permit the wrongful
deferral of several hundred thousand dollars of taxable gain.
These are not matters that occurred inadvertently or on a one-
time basis. Petitioner also consistently failed to report
substantial amounts of income.
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