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Accordingly, we shall not disregard his testimony in reaching our
findings and conclusions.
2. Reliance on Return Preparer
According to petitioner, she placed statements and memoranda
regarding her Merrill Lynch account into sealed envelopes that
were sent to Mr. Reiter. We conclude that petitioner did not
send these memoranda or the Merrill Lynch statements to Mr.
Reiter. Rather, petitioner fabricated these memoranda long after
the fact.
If petitioner had told Mr. Reiter that she had distributed
taxable amounts directly to her personal accounts, he would have
relayed that information to his staff and made sure the
additional income was reported on petitioner’s tax return. The
evidence is clear that petitioner failed to inform Mr. Reiter of
the income she diverted to her Merrill Lynch account and she
failed to provide Mr. Reiter with her Merrill Lynch account
records.
The jury in her criminal trial convicted petitioner on all
three counts. Accordingly, they rejected her good faith reliance
on her return preparer defense, regarding 1989, 1990, and 1991,
as they were instructed they must acquit her if they believed
this defense.
The income was not reported on her returns not because Mr.
Reiter made a mistake, but because petitioner concealed the
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