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any of the disallowed checks or the accounts payable to
Okay Leaf was used to purchase tobacco. Petitioners'
evidence in the form of the audit report covering
Mr. Wells' returns for 1988 through 1991 suggests that
Beaufort Leaf sold excess-quota tobacco after having filed
fraudulent Forms MQ-79 and paid some of the proceeds of
the sales to Mr. Wells or members of his organization.
The checks disallowed by respondent are payable to persons
identified in the audit report as persons associated with
Mr. Wells. The same is true of the account payable to
Okay Leaf, a company identified in the audit report as
controlled by Mr. Wells. Therefore, petitioners' own
evidence suggests that the Forms MQ-79 filed by Beaufort
Leaf were falsified to document purchases of tobacco when,
in fact, purchases of tobacco were not made by Beaufort
Leaf. The audit report suggests that the checks were
issued to persons related to Mr. Wells in order to transmit
proceeds of the scheme to Mr. Wells. Furthermore, we note
that petitioners did not seek testimony from any of the
check payees or Okay Leaf to show the nature of the
payments made. See Wichita Terminal Elevator Co. v.
Commissioner, 6 T.C. 1158 (1946), affd. 162 F.2d 513
(10th Cir. 1947). We also note that petitioners do not
claim that the checks were paid for any purpose other
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