A. Lee Petersen and INI Builders, Inc. - Page 10

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          and make up the reduction with an agreement to pay Burke a bonus            
          in an equivalent amount.  Petitioner did not tell Thorpe that his           
          proposal to change the character of the payments would impose an            
          income tax burden on Burke’s estate.  Thorpe told petitioner he             
          did not care what petitioner did, so long as the estate was not             
          adversely affected.                                                         
               Virginia Cutshall (Cutshall) is an Alaska certified public             
          accountant who prepared INI's and petitioner's income tax returns           
          and petitioner’s amended returns for the years in issue.  In                
          preparing INI's TYE 9/84 return, Cutshall used INI's general                
          ledger, corporate minutes, payroll records, and other information           
          provided by petitioner.  Cutshall relied on either the corporate            
          minutes or the information received from petitioner in deciding             
          that INI could accrue a bonus payable to Burke.  Prior to and at            
          the times of the preparation of petitioner’s original 1984 and              
          1986 income tax returns, petitioner did not inform Cutshall of              
          his efforts to reduce the purchase price of his obligation to buy           
          Burke’s stock and to make up the difference with INI bonus                  
          payments, nor did he ask for her advice on the tax consequences             
          of the course of action he was trying to implement.                         
               Thorpe did not understand the tax implications of the                  
          reformation that petitioner had proposed.  Thorpe is a sales                
          manager for an auto dealer.  He has not completed high school,              
          nor does he have any tax training; he does not even balance his             





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