Leslie R. Barth - Page 6

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            other entities with which he was involved.  On July 9, 1980, he                             
            filed an individual joint return for 1976.  Petitioner did not                              
            file a Federal income tax return for 1977.  No later than 1982,                             
            the Internal Revenue Service (IRS) commenced an investigation of                            
            petitioner.  On April 3, 1986, petitioner pleaded guilty to                                 
            failure to file his personal income tax return for 1979 in                                  
            violation of section 7203.  On May 19, 1986, he filed individual                            
            joint returns for 1978, 1979, and 1980 in order to receive                                  
            favorable consideration at the time of sentencing on his                                    
                  In late 1979 or early 1980, attorneys for petitioner                                  
            employed William Lipton (Lipton), who was then a partner at the                             
            accounting firm of Ernst & Whinney, to prepare petitioner's                                 
            Federal tax returns for 1978, 1979, and 1980.  For approximately                            
            3 years, Lipton attempted to reconstruct for petitioner books and                           
            records in order to prepare returns.  The records, however, were                            
            in terrible shape, consisting of nothing but check stubs and                                
            canceled checks.  Brian Onofrio (Onofrio), an employee of                                   
            petitioner, also attempted to reconstruct petitioner's records in                           
            order to prepare tax returns for the years in issue.  Richard                               
            Timbie (Timbie) was one of several lawyers representing                                     
            petitioner in relation to his failure to file returns.                                      
                  Petitioner's return filed for 1976 reported adjusted gross                            
            income of $4,315.86.  He claimed a loss from the law firm as a                              
            subchapter S loss and did not report the income received from                               

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