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account, which accords with petitioners' stated practice of
transferring large sums of money from their business accounts to
the BNP account to earn greater interest. Finally, contrary to
petitioner's testimony, monthly bank statements reveal that the
Bank of America account did not always carry a large balance.
Petitioner must have known of the additional income because
otherwise, given the outstanding checks he had written on that
account and its prior balance of only $155,874.47, he would have
overdrawn the account by almost $45,000.
4. Attempts To Conceal Assets
Susanna instructed Sanrio to pay $840,000 by wire transfer
into her nonbusiness account at BNP. This was the only direct
business deposit into that account in 1990. Sanrio did not issue
a Form 1099 for its payment, an error on its part because of the
method of payment. However, petitioners did not request a Form
1099, despite petitioner's knowledge of the existence of such a
form and his reliance on it in other instances to verify interest
and miscellaneous income.
Furthermore, although petitioners consulted an accountant
about the limit to their home mortgage interest deduction and
about amending their return to increase another deduction, they
did not discuss applying unrealized capital losses against the
$840,000 with an accountant. In fact, they concealed that income
completely from their tax preparer. Case law is replete with
support for holding that petitioners may be liable for the civil
fraud penalty as a result of such an action. See Korecky v.
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