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constitute nontaxable transfers. Mr. Yoon also made a $100,000
downpayment on the purchase of a house in October 1990, spent
$17,180 on improvements to the residence made in 1991 and paid
for in early 1992, and at various times during the years in issue
drove an Acura Legend, a Range Rover, and a Lexus. Mrs. Yoon
worked for a clothing manufacturer in 1988 through 1989, after
which time she gave birth and was not employed. When petitioner
first became associated with Mr. Yoon, Mr. Yoon had an old
automobile and no appearance of affluence. Mrs. Yoon's parents
also appeared to be of modest means. By February 1993, Mr. Yoon
had begun taking steps to relocate to Washington State. After
petitioner discovered the cashed checks in 1993, he directed the
office staff to open mail and provide it directly to him and not
to Mr. Yoon.
Yearend Ledger Adjustments
Most of the information necessary to complete petitioner's
returns was provided to the accountants by Mr. Yoon.
Petitioner was aware of a problem created by using the deposits
in the client trust accounts as a starting point for the firm's
gross receipts; i.e., the method overstated income by including
amounts that did not belong to the firm. There was no problem to
the extent that a settlement check was received and the payments
to the client and medical provider were made in the same year.
The problem arose with respect to amounts collected but
unreimbursed until the following year. At various times, it
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