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blame their return preparers for the substantial errors in
reporting their tax liability for 1997 when petitioner, who alone
possessed the information that would have indicated potential
discrepancies between petitioners’ actual tax liabilities and the
amounts reported on their returns, provided the accountants with
misleading information and documentation regarding the nature of
disbursements out of T.J. Construction. See Bacon v.
Commissioner, T.C. Memo. 2000-257, affd. without published
opinion 275 F.3d 33 (3d Cir. 2001). Furthermore, petitioner’s
failure to inform the accountants, despite regular meetings with
them, of the existence of the cash advances from petitioner to
Phillips or that Phillips was endorsing checks received from
T.J. Construction back to petitioner, who was then depositing
those funds in petitioners’ personal bank account, is indicative
of fraud. See Medlin v. Commissioner, supra; Ishler v.
Commissioner, T.C. Memo. 2002-79.
Petitioners cite McGowan v. Commissioner, T.C. Memo. 2004-
146, affd. 187 Fed. Appx. 915 (11th Cir. 2006), in support of
their contention that the errors on petitioner’s tax returns are
due to confusion between petitioner and his accountants, and not
fraudulent intent. We have found, for the reasons stated above,
that the errors were deliberately designed by petitioner and were
coupled with several other indications of fraudulent intent.
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