- 7 - Bergman & Barth. Petitioner's returns for 1978, 1979, and 1980 reported adjusted gross income of $69,434, $21,773, and $126,685, respectively. Attached to each return, on the advice of Timbie, was a statement that the income reported on the return did not include amounts "withdrawn by the taxpayer from this law firm and other related entities. Those withdrawals were contemporaneously recorded as loans and were repaid by the taxpayer in the taxable year or in subsequent years." The amounts thus excluded from taxable income reported on the returns were $174,300 for 1978, $282,900 for 1979, and $83,600 for 1980. No loan documents were ever prepared or executed by petitioner. The amounts claimed to be loans were reconstructed from notes on check stubs, and no records showing actual repayments were maintained. On the financial statements that he submitted during the years in issue, as set forth above, petitioner did not disclose any loans due to the law firm or his other entities. After examination of the returns belatedly filed by petitioner, respondent determined that petitioner had additional compensation, interest, and other income for the years in issue. For 1976, respondent determined that no election was filed to qualify the law firm as an S corporation and that it had not been established that any deductible loss was sustained. The net adjustments determined by respondent increased petitioner's income by $306,673 for 1976, $226,905 for 1978, $396,008 forPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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