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the amounts of compensation he paid to his masonry workers. One
such worker was subsequently convicted for subscribing false
income tax returns under section 7206(1) for 1985, 1986, and 1987
for failing to report income earned as a mason, including more
than $62,000 paid by petitioner.
Petitioner was indicted under section 7201, Attempt to Evade
or Defeat Tax, for the years 1987 through 1989. After a jury
trial in 1995, petitioner was acquitted on all three counts.
Sometime between 1975-77, petitioner purchased a male
Arabian horse named Sunset Wailea. Petitioner's 1981 Federal
income tax return included a Schedule C that listed petitioner's
business activities as “contracting, farrier, horse breeding”
under the business names of “S&H Masonry” and “Keone's Horse
shoeing and Breeding”. Petitioner's 1985 Federal income tax
return claimed expenses from “Keone's Ranch Supplies.”
On April 9, 1988, petitioner broke his left ankle as the
result of an accident. He was initially treated on that same day
at Wahiawa General Hospital. The following day he underwent
surgery at Straub Clinic. The medical records from Wahiawa
General Hospital indicate that petitioner stated the cause of the
injury was a “horse fell down on him”. Petitioner told the
doctors at Wahiawa General Hospital that his injury resulted from
a horse falling on him. The medical records from Straub Clinic
also state the cause of the injury to be “struck accidentally by
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