Tony D. Ishizaki - Page 6




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          possibility of issuing summonses to customers to obtain copies of           
          checks written to Privilege House, Mrs. Ishizaki provided a list            
          of cashed checks.  Ms. Encarnacion also met at some point during            
          the examination with petitioner.                                            
               During 1997, Mrs. Ishizaki filed for separation from                   
          petitioner.  The divorce settlement was not yet finalized at the            
          time of trial of this case in March of 2001.  In the intervening            
          period, the record indicates that control of the Privilege House            
          business shifted between the spouses.  At the time of trial,                
          petitioner was no longer involved and had begun another furniture           
          company of his own, operating under the name of Anderson & Daish.           
               On March 25, 1999, respondent issued a notice of deficiency            
          to petitioner and Mrs. Ishizaki.  Therein respondent determined             
          that petitioners had $191,831 in unreported income for 1995, in             
          the form of constructive dividends from Privilege House.                    
          Although Mrs. Ishizaki did not petition the Court for                       
          redetermination, petitioner filed his petition in this case on              
          June 22, 1999.  The petition expresses the alleged errors in the            
          notice of deficiency as follows:                                            
               4.  The determination of the tax set forth in the said                 
               notice of deficiency is based upon the following                       
               errors.                                                                
                    a.  The taxpayer is an innocent spouse and did not                
                    in any way benefit from the unreported income.                    
                    b.  The petitioner does not believe that he signed                
                    the tax return for that year.                                     
               5.  The facts upon which the petitioner relies, as the                 






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