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In addition to the checks received by petitioner in 1987 and
1988, he would also receive cash from some patients, usually $50
to $100 per week. He did not include this cash in the
calculation of his income.
In the Schedule C for petitioner's medical practice, gross
income was reported in the amounts of $402,000 for 1987 and
$250,000 for 1988.
Petitioner understated the Schedule C gross income from his
medical practice in the amounts of $175,285 for 1987 and $191,979
for 1988. The correct gross income received from his medical
practice was $577,285 for 1987 and $442,262 for 1988. There was
a 30-percent omission of gross income in 1987 and a 43-percent
omission in 1988.
Petitioners' Return Preparers
From 1978 through 1990 petitioners' Federal income tax
returns were prepared by their accountant, Mr. Bruno, and his
accounting firm, Bruno and Tervalon. Mr. Bruno was managing
partner of the firm. Marie Walters, a C.P.A., assisted Mr. Bruno
in preparing petitioners' income tax returns for 1987 and 1988.
Petitioner's Banking Practices at First Federal Savings Bank
Petitioner had a checking account in his name at First
Federal Savings Bank (First Federal) in which he deposited checks
received from personal injury lawyers. Prior to 1987, he
deposited into that account all the checks he received. But he
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