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return, and subsequently amend the return upon receipt of the
correct information. Petitioner instructed Mr. Pressley that he
would rather file his return for 1989 based on the documentation
that he had at that time. Petitioner’s 1989 Federal income tax
return did not reflect any income received from Mr. Hall.
During the preparation of petitioner’s 1990 tax return, Mr.
Pressley again urged petitioner to obtain the information from
Mr. Hall, or, in the alternative, to estimate the amount of money
received from Mr. Hall. Petitioner’s 1990 Federal income tax
return did not reflect any income from Mr. Hall. Similarly,
petitioner’s 1991 Federal income tax return did not reflect any
income he received from Mr. Hall.
In October 1992, respondent began an examination of Mr. Hall
regarding his 1989, 1990, and 1991 taxable years. James T.
Givens, a revenue agent for the Internal Revenue Service,
conducted the examination of Mr. Hall. The main issue in this
examination concerned the deduction of expenses on Mr. Hall’s
returns. Mr. Givens requested documentation from Mr. Hall in
order to verify the payment of these expenses. Petitioner was
the largest recipient of these payments.
Mr. Hall engaged Roger Clark to reconstruct his records.
Based on his reconstruction, Mr. Clark prepared an affidavit for
petitioner's signature in order to substantiate Mr. Hall's
deduction for contract labor. On November 21, 1992, petitioner
signed an affidavit stating that he "received cash payments from
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