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and not in him, and that he thought it was a loan from his
children. Petitioner’s testimony in this regard is not credible.
Petitioners contend that Lewellen and Smith told petitioner
he did not need to report the Anis income. We disagree.
Petitioners’ claimed reliance on Lewellen and Smith for failure
to report the Anis income in 1995 is not credible. First,
Lewellen did not know about the Anis partnership distributions in
1995. Second, in an April 28, 1994, letter to petitioner and the
Anises, Smith specifically advised that any cash received from
the Stovers would be taxable on receipt.
b. Concealing Income From the Taxpayer’s Return
Preparer
Concealing income from one’s return preparer can be evidence
of fraud. Korecky v. Commissioner, 781 F.2d 1566, 1569 (11th
Cir. 1986), affg. T.C. Memo. 1985-63; Farber v. Commissioner, 43
T.C. 407, 420 (1965), modified 44 T.C. 408 (1965). Petitioner
did not tell Lewellen until after Lewellen had filed petitioners’
1998 return in October 1999 that petitioner had received client
fees of $135,422 in 1998 and had arranged to have those fees
deposited in O’Leary’s account.
Petitioners contend that petitioner told Lewellen about the
$135,422 before Lewellen prepared their original 1998 return, and
that Lewellen was to blame for their failure to report the
$135,422 in income. We disagree. Petitioner did not tell
Lewellen or give Lewellen records showing that petitioner had
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