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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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