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not disclose who, if anyone, owned the remaining interests in
PAC. PAC was in the business of selling and repairing personal
computers and computer parts.
Petitioner was in charge of PAC. He made the day-to-day
business decisions for PAC, signed its corporate income tax
returns, had sole signature authority for PAC’s business checking
account, hired and supervised PAC’s bookkeepers and return
preparers, and dealt with customers daily by making sales and
receiving payments.
Petitioner understood that all revenue receipts from the
sale of computer equipment and from repairs performed by PAC
should be deposited in PAC’s business account. Petitioner also
understood that PAC’s accountant was preparing PAC’s income tax
returns on the basis of information regarding sales, purchases,
and expenses that petitioner provided to him from PAC’s books and
records. PAC’s books and records were maintained under
petitioner’s supervision and control. Petitioner understood that
if he failed to record sales revenues in PAC’s books and records,
those revenues would not be reported on PAC’s income tax returns.
Petitioner instructed many of PAC’s customers to pay for
their purchases or repairs in cash, to leave the payee lines of
their checks blank, or to write petitioner’s name on the payee
lines of their checks. Petitioner also wrote, or asked PAC’s
customers to write, on the memo lines of their checks to
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Last modified: May 25, 2011