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of income and avoid the payment of taxes. We find petitioners’
explanation implausible.
3. Failure To Provide Return Preparer With Accurate
and Necessary Information
Petitioners also failed to provide their tax preparer with
all the information and records necessary to prepare their 1994
and 1995 individual and corporate income tax returns. Mr. Ling
informed Mr. Kong that all income should be reported and all
corporate receipts should be deposited into a corporate account.
When Mr. Kong provided information to Kim Y. Ling, P.C., to
prepare the individual and corporate income tax returns in 1994
and 1995, Mr. Kong failed to inform the tax preparer that a large
portion of the corporate receipts had not been deposited into the
corporate account. Mr. Kong did not advise Kim Y. Ling, P.C., of
additional unreported income until after respondent began his
investigation. We believe that Mr. Kong intended to reduce taxes
by concealing corporate receipts and by failing to provide this
information to his accountant. See Federbush v. Commissioner, 34
T.C. at 750.
4. Maintaining Inadequate Books and Records
Sam Kong Fashions failed to maintain adequate books and
records and failed to maintain correct records of its gross
receipts. Petitioners have failed to offer any records from Sam
Kong Fashions to show the number of full- and part-time
employees, the hours that these employees worked, or the hourly
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