- 7 -
contending primarily that Ideal Management was a sham.
Petitioner argues that it was not. Petitioner, citing Portillo
v. Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in part and
revg. in part T.C. Memo. 1990-68, contends primarily that
respondent's determination was a "naked assertion" because
respondent did not audit Ideal Management. Petitioner also
contends that Ideal Management was not a sham.
We agree with respondent that the disputed income is
includable in petitioner's 1992 gross income because Ideal
Management was a sham; i.e., it lacked economic reality. We find
first that respondent's determination rests on a solid
foundation. Respondent performed properly a bank deposit
analysis of petitioner's and Ideal Management's bank accounts,
see Parks v. Commissioner, 94 T.C. 654, 658 (1990); Nicholas v.
Commissioner, 70 T.C. 1057, 1064 (1978); see also Estate of Mason
v. Commissioner, 64 T.C. 651, 656-657 (1975), affd. 566 F.2d 2
(6th Cir. 1977); Harper v. Commissioner, 54 T.C. 1121, 1129
(1970), with the knowledge that petitioner was subject to an
outstanding Federal tax lien aggregating almost $100,000, that he
was connected with Ideal Management, and that his reported gross
income and itemized deductions for 1992 had decreased
dramatically from prior years. Respondent reached her
determination in the light of United States v. Scott, 37 F.3d
1564 (10th Cir. 1994). In Scott, the Court of Appeals for the
Tenth Circuit examined certain trusts involving IBA and Mr. Yung,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011