John J. Burke and Vivian Burke - Page 12

         Midland                & Assoc.      withdrawals                                               
         C.H.I.E. A/C                                                                                   

         Marine  921-11974-7   John J. Burke  checks to   23,658.95  413,038.00  20,540.00              
         Midland                & Assoc.      Ard Rhei/                                                 
         Jury's, John                                                                                   
         Burke, and cash                                                                                

         Bank of 01-3-401414-1 John J. Burke  checks to    7,500.00                                     
         Smithtown              & Assoc.      cash, John                                                
         Expense A/C   Burke, and                                                                       
         employees                                                                                      

         Bank of 01-6-400247-9 John J. Burke  checks to   66,900.00                                     
         Smithtown              or Vivian     cash, Ard                                                 
         Burke         Rhei, and                                                                        
         John Burke                                                                                     

         Marine  921-11976-3   John J. Burke  noncash    112,050.00   87,984.00  34,706.07              
         Midland                & Vivian      deposits                                                  
         Burke                                                                                          
                                                                                                        
         Total income                                   $263,609.00 $593,322.00 $90,646.00              


                                                OPINION                                                 

            Additional Income                                                                           

                  Respondent determined that Mr. Burke failed to report income in the                   
            amount of $59,648, $242,669,9 and $50,746 on the delinquent returns that he                 
            filed for 1985, 1986, and 1987, respectively, and that the source of this                   
            income was money that Mr. Burke diverted from U.S. Life premium funds.  Mr.                 
            Burke contends that the amounts in question constituted either loans from U.S.              
            Life10 or money that was embezzled by his employees.                                        


            9This includes $22,448 in addition to the amount determined in the notice                   
            of deficiency.  See supra note 1.                                                           
            10We note the inconsistencies in Mr. Burke's position.  On brief, Mr.                       
            Burke admitted that he "often withdrew sums in excess of his actual commission              
            entitlement [and that] [s]uch excess withdrawals were treated * * * [as] loans              
            due from Mr. Burke to the Life insurance company."  However, when asked by                  
            respondent at trial if he characterized his use of MPC account funds as loans,              
            Mr. Burke denied even using funds from the premium accounts.  Nevertheless,                 
            when questioned again about this issue later in the trial by his own counsel,               
            Mr. Burke explained:  "They [U.S. Life] had the option of treating it [Mr.                  
            Burke's withdrawal of funds in excess of his commissions] like a loan, okay.                
            They, however, never exercised that option.  They never charged me any                      
            interest."                                                                                  



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Last modified: May 25, 2011