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Petitioner did not provide to his return preparer, Mr.
Kelly, any checks or other documents relating to his real estate
transactions, and he did not disclose to Mr. Kelly the existence
or nature of his use of Mr. Miles’s law firm’s trust account.
Petitioner provided to Mr. Kelly only spreadsheets reflecting his
deposits into and expenditures from his bank accounts.90
Concealing evidence from one’s tax return preparer is indicative
of fraud. Ishler v. Commissioner, T.C. Memo. 2002-79.
Petitioner’s reliance on spreadsheets of his bank deposits
and disbursements to compute his income tax liability was surely
misplaced, and there is considerable evidence that he knew this
to be the case. Indeed, he was told during the examination of
his 1983 and 1984 returns, which occurred prior to filing the
returns for the years in issue, that this method of computing
taxable income was not acceptable. The duty of filing accurate
returns cannot be avoided by placing responsibility upon an
agent, especially where the taxpayer has withheld books, records,
and other information regarding sources of income, see Bacon v.
89(...continued)
Commissioner, 732 F.2d 1459, 1462 (6th Cir. 1984) (“concealment
of bank accounts from Internal Revenue agents is yet another sign
indicating fraud), affg. T.C. Memo. 1982-603; Grosshandler v.
Commissioner, 75 T.C. 1, 20 (1980); Kalo v. Commissioner, T.C.
Memo. 1996-482 (taxpayer’s failure to mention foreign bank
accounts), affd. without published opinion 149 F.3d 1183 (6th
Cir. 1998).
90This same lack of disclosure was apparent in the
preparation of petitioner’s 1977-1982 spreadsheets and tax
returns involving Mr. Kelly and Mr. Brooks.
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