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paid for the purchase of a 1960 Ferrari;4 (5) on July 2, 1987,
Ms. Allen was paid $31,800; (6) on July 9, 1987, income taxes of
$8,472 were paid to the Internal Revenue Service (IRS); (7) on
July 28, 1987, $12,000 was paid to Mid America Exotic Auto Sales;
(8) on July 30, 1987, income taxes of $1,482 were paid to the
IRS; (9) on September 17, 1987, child support of $10,000 was paid
to Ms. Allen; (10) on October 9, 1987, a house payment of $30,000
was paid to Mr. and Mrs. Melitshka with respect to petitioner’s
personal residence; (11) on November 2, 1988, political
contributions of $2,800 were paid. None of those payments from
the law firm’s trust account were reported as income by
petitioner.
Mr. Kelly prepared petitioner’s Forms 1040, U.S. Individual
Income Tax Returns, for 1983 through 1988.5 Petitioner provided
Mr. Kelly with spreadsheets which reflected deposits into, and
expenditures from, petitioner’s bank accounts for the years 1983
through 1988.6 Those spreadsheets provided the basis for
preparing petitioner’s tax returns for those years: The income
4The bill of sale and the application for a temporary tag
for the Ferrari were in the name of Mr. Miles’s law firm;
however, petitioner was its actual owner.
5Mr. Kelly is a certified public accountant who has known
petitioner since 1975. Mr. Kelly and petitioner were members of
the Ferrari Club of America.
6The spreadsheets were prepared by Ms. Allen at petitioner’s
request. Petitioner provided Ms. Allen guidance in preparing the
spreadsheets.
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