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calculating the income and deductions shown on the return or any
of the information requested in the IDRs. Petitioners also
failed to provide information for their 1994 or 1995 return.
Respondent issued a notice of deficiency for 1993, 1994, and
1995 in which various adjustments were made to petitioners'
income and deductions and additions to tax and penalties were
determined.
B. Petitioners' Income
Petitioners held bank accounts at Sandy Spring National Bank
(Sandy Spring) during 1993 through 1995 and at John Hanson
Savings Bank (John Hanson) during 1993 and 1994. Respondent
conducted a bank deposits analysis to determine: (1) The amount
of fees petitioner received in connection with his Schedule C
business as a tax return preparer; (2) which checks petitioner
received in connection with his Schedule C business activities as
a stockbroker; and (3) the identity of other unexplained
deposits.
Using the Internal Revenue Service's (IRS) Return Preparer
Listing Information Database, respondent compiled a report of the
individual income tax returns bearing petitioner's Social
Security number and identifying him as the paid return preparer
during the years in issue. The database revealed that petitioner
prepared individual returns in each year as follows:
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