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substantial evidence that petitioner knew he was taxable for such
a transaction before the filing of his return.
In his Forms 2688 for the 1986, 1987, and 1988, tax years,
petitioner requested an extension because “Taxpayer has not
received all needed K-1's for 1065 & 1120 tax returns that
represent a substantial portion of his income. Without these
items a complete and accurate return cannot be prepared.”
However, petitioner never provided any Schedules K-1 to Mr.
Kelly. Moreover, in the examination of his 1983 and 1984 Forms
1040 filed on January 30, 1986, and March 7, 1986, respectively,
petitioner informed the revenue agent that he was not involved in
any corporations, partnerships, or trusts, i.e., entities from
which Schedules K-1 might be issued. We have found as fact that
petitioner was involved in several business entities, and
petitioner accepts that he owned properties held in trust by Mr.
Miles and other trustees under his control. We also note that
petitioner informed the revenue agent examining his 1983 and 1984
returns that his Cayman Islands trust account was closed in 1983.
However, petitioner subsequently received five checks totaling
$135,000 from the Cayman Islands trust in 1985. We find that
this record of inconsistent statements and claims by petitioner
is yet another indication of fraud.89
89The making of false and inconsistent statements to the
Commissioner’s revenue agents during the course of their
investigation indicates fraudulent intent. Solomon v.
(continued...)
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