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received cash and an interest in two parcels of real property
through the Anis partnership in 1995.
Petitioner has not shown that his failure to include in
income for 1995 amounts from the Anis partnership ($107,073) for
settlement of his claim for attorney’s fees was not due to fraud.
Thus, petitioner is liable for the addition to tax under section
6663 with respect to the underpayment for 1995 attributable to
the Anis partnership distributions.
b. Income Diverted by Edgar in 1995 and 1998
The parties stipulated that Edgar deposited $67,437 in 1995
and $87,943 in 1998 in petitioner’s Big Bear checking account and
paid some of her personal expenses from that account, and we have
found that she did so without his knowledge or consent. Thus,
petitioners’ failure to report income of $67,437 in 1995 and
$87,943 in 1998 attributable to Edgar’s diversion of those funds
was not due to fraud.
c. Client Fees Omitted From Original 1998 Return and
Reported on Amended 1998 Return
Petitioner admits that client fees of $135,422 were
deposited in O’Leary’s account in 1998 and were not deposited in
petitioner’s law firm account. Petitioner contends that these
fees were sent to O’Leary to be invested, not to be concealed
from respondent. Petitioner claims that he told Lewellen about
those fees, but Lewellen erroneously failed to report them on
petitioners’ original 1998 return. Petitioner claims that he and
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