David W. Hill - Page 5

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               Petitioner’s returns for the taxable years 1989, 1990, and             
          1991 were prepared by Fred Pressley.3  Mr. Pressley prepared                
          petitioner’s returns based upon documentation supplied to him by            
          petitioner.  The records maintained by petitioner included the              
          Forms 1099 referred to above, rental income and expense records,            
          and records pertaining to the operations of his consulting                  
          company.  Petitioner provided Mr. Pressley with documentation for           
          expense items in amounts as small as $3.26.  Petitioner also                
          provided Mr. Pressley with Partner's Share of Income, Credits,              
          Deductions, Etc. (Schedule K-1's) from Aquamar and Skyview                  
               During the preparation of petitioner’s 1989 tax return,                
          petitioner informed Mr. Pressley that he had received income from           
          Mr. Hall, but had not received a Form 1099 from Mr. Hall.                   
          Petitioner did not give Mr. Pressley information regarding the              
          amount of income he had received from Mr. Hall.  Mr. Pressley               
          initially advised petitioner to obtain a Form 1099 from Mr. Hall;           
          however, petitioner informed Mr. Pressley that he would not be              
          able to obtain the Form 1099 by the due date of the return.  Mr.            
          Pressley then advised petitioner that it would be appropriate to            
          estimate the amount of the income, report that estimate on the              

               3Mr. Pressley’s work experience is primarily in hotel                  
          management and the laundry and dry cleaning services.  In 1978,             
          Mr. Pressley was employed by H & R Block as a seasonal tax return           
          preparer.  Mr. Pressley operated his own tax service from 1980              
          until 1987.  He continued to prepare income tax returns on a                
          part-time basis until 1993.                                                 

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