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7206(1) relating to the years 1988, 1989, and 1990.3 On August
25, 1995, the U.S. District Court for the Western District of New
York, on the basis of petitioner's guilty plea, held petitioner
guilty of one count of violating section 7206(1).
Invoices from the Bullfrog's vendors (vendor invoices), when
compared to purchases reported on petitioner's returns (reported
purchases), demonstrate that petitioner failed to report
purchases of $39,228, $42,787.80, $48,060.90, and $13,620.32 for
1987, 1988, 1989, and 1990, respectively (unreported purchases).
Reported purchases were paid for by checks drawn on the
Bullfrog's account at Marine Midland Bank, and unreported
purchases were paid for by cash drawn from the cash register.4
Petitioner kept no record of his unreported purchases, and he
failed to advise his return preparer, Michael Dillon (Mr.
Dillon), of the unreported purchases.5 Petitioner failed to
report the gross receipts generated by the sale of the unreported
3 The plea agreement, dated May 15, 1995, stated the following
factual basis for petitioner's plea of guilty:
The defendant failed to report substantial cash
purchases of beer, liquor, and wine on his federal
income tax returns for the 1988, 1989, and 1990 tax
years. The defendant knew the amounts stated on his
tax returns as expenses were not accurate. The
defendant signed the aforementioned federal income tax
returns under penalty of perjury, knowing the returns
falsely stated the amount of expenditures for beer,
liquor, and wine.
4 Petitioner ordered and paid for all of the inventory
purchased for the Bullfrog.
5 The parties agree, however, that petitioner's reported
purchases are not in dispute.
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