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These freewheeling activities generated income subject to
tax for petitioners. Robert understood enough about Federal
income tax laws to understand this. Many of the entities he
created were advertised as entities that could facilitate tax
shelter investments, or that could prepare or assist in preparing
Federal income tax returns. Yet Robert failed to report
substantial amounts of the income thus generated. Petitioners
filed their 1980 tax return about 3 months late. They did not
file their 1981 and 1982 tax returns until after the notices of
deficiency were issued, many years late. Even then, they failed
to report substantial amounts of their income.
In his opening statement Robert claimed as follows:
As to the 1981, 1982, failure to file, under advice of
counsel because of an ongoing fraud investigation by a
Norman Heidleberger, it was -- the advice was given to
us by counsel not to file income tax returns. That to
file the tax return could adversely affect us in the
way of a criminal investigation so therefore following
counsel's advice we did not file.
Robert testified, but he did not repeat under oath this
contention from his opening statement.
Monica testified as follows:
the advice from Mr. Moore was to clear up the criminal
investigation which had already ensued before filing
another tax return.
The following colloquy then occurred:
BY MR. HILL:
Q. Mrs. Iles, you testified as to advice from Mr.
Moore with respect to the filing of tax returns and
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