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fact been reported, or (3) that the unreported income identified
by respondent was somehow tax exempt.11
Agent Oertel obtained additional information of unreported
income for 1988 and 1989 after the notice of deficiency was
mailed. With respect to 1988 and 1989, respondent established
that petitioner had unreported income of $96,531.82 and
$56,410.96, respectively, but had only determined in the notice
of deficiency unreported income of $93,374 and $52,543,
respectively. Respondent does not seek to increase the amount
11Instead of addressing the unreported income issues
identified by respondent, petitioner attempted (unsuccessfully)
to elicit testimony from the computer equipment purchasers that
the purchased equipment may have belonged to a Mr. Hu, rather
than to petitioner or PAC. According to the testimony, Mr. Hu
was a former employee of PAC who spoke little English and
assisted petitioner in assembling and repairing computers. The
witnesses all testified that they bought the equipment from PAC’s
store, received a PAC receipt, and dealt only with petitioner.
Petitioner offered no evidence that Mr. Hu owned the equipment,
and he failed to explain how Mr. Hu’s alleged ownership of the
equipment would be relevant; after all, the purchase price ended
up in petitioner’s bank account.
Petitioner also attempted to introduce into evidence an
affidavit allegedly signed by Mr. Hu, in which Mr. Hu allegedly
took responsibility for the deposit of PAC’s money into
petitioner’s bank account. We sustained respondent’s objection
to the admission of the affidavit into evidence as hearsay. We
also fail to see how the affidavit would be relevant. Even if
Mr. Hu made the deposits to petitioner’s bank account, the
testimony of the witnesses left no doubt that petitioner was in
charge, that petitioner orchestrated the scheme to avoid
detection of his unreported income--by requesting cash payments,
by requesting that checks be made out in his name or with the
payee left blank so that he could insert his name, and by falsely
causing indications on the check to reflect loans rather than
computer sales--and was fully aware of both the deposits and his
failure to report the income.
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