Henry Deletis, Jr. - Page 10

                                       - 10 -                                         
          Revenue Service (Nahmias) conducted an independent investigation.           
          Nahmias traced the stolen cars to the third-party used car                  
          dealers who purchased them and determined the amounts paid to               
          petitioner for these cars.  He interviewed the dealers involved             
          and reviewed the canceled checks, the falsified new car invoices,           
          and the loan payments.  Nahmias allowed petitioner deductions of            
          $18,324.27 and $56,036.34 for 1966 and 1967, respectively, for              
          the deposits, loan payments, and insurance expenses on the stolen           
               For the taxable year 1966, respondent determined that                  
          petitioner had failed to report $5.73 in interest income and                
          $37,636.73 in net income from the sale of the stolen cars,4                 
          resulting in a deficiency in tax of $14,374.82.  Respondent also            
          determined an addition to tax for fraud under section 6653(b) in            
          the amount of $8,113.44.  Respondent issued the notice of                   
          deficiency for taxable year 1966 on February 5, 1993.                       
               Revenue Agent Metz (Metz) prepared a corporate return for              
          the Stables for the taxable year 1967.  Metz had none of the                
          Stables' business records, so he calculated income and expenses             
          through inquiries to third-party sources.  Metz used the American           
          Racing Manual Statistics to determine the amounts won by the                

          4 The net income figure represents:                                         
                         Income from car sales    $42,050.00                          
                        Income from car sales     13,911.00                          
                         Total income             $55,961.00                          
                         Total expenses         -  18,324.27                          
                         Net income             $37,636.73                            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011