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Mr. Valentino by Mr. Timor. The intent of Weinstein & Anastasio
in reporting these payments was “to be consistent with the
reporting that was presented to us by Flocktex.”
Preparation of petitioners’ tax returns was frequently
completed with little time remaining before the filing deadline.
It was not uncommon for family members to sign the returns
without reviewing or discussing the items therein with their
accountant. Petitioners relied on Mr. Valentino for the accuracy
of their returns.
FIL’s tax returns were examined by the Israeli taxing
authorities for the years 1991, 1992, and 1993. Examination by
the Internal Revenue Service (IRS) of the domestic returns began
in 1993, and the audit was eventually expanded to include the
1991 through 1996 years. During the examination process, IRS
agents conducted several interviews with members of the Deitsch
family. Also pursuant to the audit, the IRS in January and
November of 1998 sent letters to Israel’s Ministry of Finance
requesting information on the nature of the payments from FIL.
In a reply dated September 8, 1999, which addressed the 1994
to 1996 years, the Ministry of Finance stated: “All Payments
made by Flocktex to Deitsch Plastic are written as an expense to
Flocktex. Flocktex did not pay Dividends to shareholders in the
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