Walter L. Medlin - Page 65

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          for the preparation of his tax returns.  Mr. Kelly prepared those           
          spreadsheets using as their basis the deposits and disbursements            
          into, and from, petitioner’s bank accounts.  Petitioner did not             
          inform Mr. Brooks that the proceeds from his real estate                    
          transactions were deposited into Mr. Miles’s law firm’s trust               
          account, that those proceeds were not accounted for on the                  
          spreadsheets, that petitioner used trustees in his transactions,            
          or that petitioner had a Cayman Islands trust account.                      
          Petitioner did not give to Mr. Brooks any books, records, or                
          closing statements from his real estate transactions.  Petitioner           
          did not file timely his Federal income tax returns for 1977,                
          1978, 1979, 1980, and 1981.  Petitioner did not file his Forms              
          1040 for those years until June 15, 1983.                                   
               Respondent audited petitioner for the 1977-1982 tax years,             
          and respondent issued a notice of deficiency for those years on             
          June 13, 1986.12  On September 12, 1986, petitioner filed a                 
          petition with the Tax Court (docket No. 36958-86).  In January              
          1988, petitioner and his representative met with respondent’s               
          revenue agent for purposes of resolving that case.  Petitioner              
          took an active role in those meetings.  Most of the real estate             
          transactions which were at issue for the 1977-1982 tax years                


               12Petitioner’s representative would not allow petitioner to            
          meet with respondent’s revenue agent assigned to examine his                
          returns or to extend the period of limitations, unless respondent           
          gave petitioner immunity from criminal prosecution.                         




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