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of securities.4 On their Form 1040, they reported adjusted gross
income and tax liability of $6,099,966 and $3,005,166,
respectively. Petitioner and Mr. Bilzerian reported an
overpayment of tax of $2,053,708. Petitioner knew that a
considerable portion of the income realized by petitioners in
1986 was related to the purchase and sale of the Hammermill
stock.
Petitioner and Mr. Bilzerian’s 1986 individual tax return
was prepared by Dwight Norris (Mr. Norris). Mr. Norris prepared
their individual tax returns for the taxable years 1982 through
1986. Mr. Norris also prepared partnership tax returns for 1986
for South Bay Fashion Center and South Bay Fashion One.5 Mr.
Norris graduated from Ohio State University in 1956 and has been
working as a certified public accountant since that time. At the
time he prepared petitioner and Mr. Bilzerian’s 1986 return, Mr.
Norris worked for the accounting firm of Porterfield & Co.,
C.P.A.s, located in Sacramento, California.6 In connection with
his preparation of the 1986 tax return, Mr. Norris received a
package of information from Mr. Bilzerian’s office consisting of
4Petitioner and Mr. Bilzerian reported deductions of
$14,101,394, resulting in a net loss of $6,038,117.
5In 1982, Mr. Norris was a business partner with Mr.
Bilzerian in South Bay Fashion One.
6At the time of trial, Mr. Norris resided in California.
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