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Park and Mr. Hwang, petitioner's accountants for the years in
issue, were recommended by Mr. Yoon. The deposits into the
client trust account were included in the general ledger as
receipts of the firm.
Petitioner's 1988, 1989, and 1990 Federal income tax returns
were all filed more than 3, but less than 6, years prior to
respondent's mailing of the notice of deficiency on July 7, 1995.
Petitioner's 1991 Federal income tax return was filed on October
15, 1992.
The 162 Disputed Checks3
Petitioner was aware that some of the 162 disputed checks
came into his law firm. Petitioner did not personally cash
settlement checks. Mr. Yoon frequently paid cash to clients of
the firm. Mr. Yoon specifically instructed the firm's employees
who witnessed these cash payments not to tell petitioner that
cash disbursements to clients were being made. In 1988 and early
1989, petitioner authorized Mr. Yoon to cash occasional
settlement checks. This policy (to petitioner's knowledge)
stopped in 1989 because the office moved to a building in which
one of the firm's banks was located, facilitating immediate
payment or cash availability from insurance settlement checks.
3 The checks in dispute are referred to by the item numbers
as marked in the record. Two of the disputed checks are no
longer at issue pursuant to the parties' stipulation of settled
issues. Additionally, items 102 and 103 are not cashed checks
but rather were deposited by petitioner into the Mitsui
Manufacturers Bank account discussed infra.
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