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1120S for the company for years 1999 and thereafter. Beginning
with petitioner’s 1999 taxable year, petitioner stopped filing
returns or making estimated tax payments.
Mr. Mazer did not advise petitioner that he was not required
to file individual income tax returns for taxable years 1999
through 2002. Mr. Mazer did not advise petitioner that his
income from the company for taxable years 1999 through 2002 was
not taxable.
On the Schedule K-1 attached to the Form 1120S for the
company for year 1999, petitioner inserted the following
statement (statement):
“The corporation has determined the net income shown on
the Schedule K-1 (Form 1120S) does NOT constitute
‘gross income’ as determined by rules set forth in the
Treasury Regulations at 26 CFR (4-1-99) Parts 1.61-1(a)
and (b) and 1.931-1(b)(1)-(4). Therefore, since there
is NO gross income, the net income shown on the K-1 is
NOT reportable on your 1040 as taxable income.”
Petitioner placed the statement on the Schedule K-1 after Mr.
Mazer had prepared the Form 1120S. Petitioner added other
statements similar to the statement to the Forms 1120S for the
company’s years 2000, 2001, and 2002.
Mr. Mazer did not advise petitioner that placing the
statement on the Schedules K-1 relieved him of the requirement to
file an individual income tax return. Petitioner did not consult
an attorney, accountant, or other tax professional about whether
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