Paul A. Bilzerian - Page 4




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               For the taxable year 1986, petitioner was involved in the              
          preparation of Federal income tax returns for some of the                   
          entities he was involved in.  Additionally, a former accountant             
          from Price Waterhouse worked full time in petitioner’s office               
          handling some of the returns.  Peat, Marwick, Mitchell & Co.,               
          C.P.A.s (Peat Marwick) prepared partnership tax returns for                 
          Bilzerian & Mack, Bilzerian Investors and Bilzerian Ventures.               
          Another accountant and a tax attorney were involved in preparing            
          tax returns for other entities which petitioner was involved in.            
               While Peat Marwick was not engaged by petitioner to prepare            
          or do any work on the 1986 individual income tax return, Peat               
          Marwick did prepare a schedule, entitled “Paul Bilzerian’s 1986             
          Tax Estimate”.  This schedule was prepared for the purpose of               
          helping petitioner make an estimated tax payment for 1986.  The             
          schedule reported the following gains from petitioner’s stock               
          dealings in Hammermill:                                                     
                         Item                     Amount                              
                         Bilzerian & Mack         $1,840,003                          
                         Bilzerian Investors      10,216,579                          
                         Bilzerian Ventures       3,107                               
                         Personal Gain            4,170,093                           
                         Total                    16,229,782                          
               On June 15, 1987, petitioner signed and filed a Form 4868,             
          Application for Automatic Extension of Time to File U.S.                    
          Individual Income Tax Return, for the taxable year 1986, along              
          with a payment of $5 million.  Petitioner was in possession of              
          the schedule prepared by Peat Marwick at that time.  On August              





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