-5-
California (the Yreka property). Petitioner bought the Yreka
property in his own name for $113,292.79.
Petitioner invested the $500,000 cashier's check in a
venture known as the CFA Notes in May 1984.
C. Petitioner's Deposit of the Lopps' Federal Income Tax
Refunds in the Oro-Tech Industries, Inc., Account
Petitioner was the bookkeeper for Oro-Tech Industries, Inc.
(Oro-Tech), in 1984. Petitioner had signature authority on the
Oro-Tech account at Valley Bank (the Oro-Tech account).
In September 1984, petitioner received, endorsed, and
deposited in the Oro-Tech account Federal tax refund checks
issued to the Lopps in the amounts of $4.13, $73,419.21, $983.41,
and $121,082.39 (a total of $195,489).
D. Petitioner's 1984 Return
Petitioner prepared his 1984 Federal income tax return and
filed it on April 18, 1988. He used his correct Social Security
number on the 1984 return. He did not report on his 1984 return
that he received $676,720.68 from the land sale or $195,489 from
the Lopps' four Federal tax refund checks.
Petitioner reported on Schedule D of his 1984 return that he
had invested $500,000 in the CFA Notes. He reported that he had
sold his interest in the CFA Notes for $350,000 in December 1984
and claimed a $150,000 short-term capital loss on Schedule D of
his 1984 return.
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