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Petitioner questioned Mr. Kisalus about the shareholder
accounts and believed that the checks he converted to personal
use were included in these accounts. While he knowingly
underreported his income during the years in issue, petitioner,
who had an eighth grade education, believed that any disparity
between his reported income and the amounts reflected in the
shareholder accounts would ultimately be reconciled and that, at
some point, he would pay the appropriate amount of tax relating
to all of his income. Inexplicably, respondent failed to address
petitioner’s apparent confusion relating to these shareholder
accounts (i.e., respondent did not question any witnesses about
this issue or address it on brief). In essence, respondent
rested on petitioner’s conviction and ignored this critical issue
relating to petitioner’s intent to evade tax.
Accordingly, respondent’s determinations relating to 1991,
1992, and 1993 are barred.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
Decision will be entered
for petitioner.
[REPORTER’S NOTE: This opinion was amended by Order dated Sept. 14, 2004.]
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