Carl Dimichele and Eileen Dimichele - Page 15

                  Before Mr. DiMichele began serving his prison term,                 
             he gave approximately $40,000 to petitioner.  Since                      
             Mr. DiMichele's release from prison, he has lived with                   
             petitioner.  Petitioner filed a Complaint in Divorce on                  
             April 29, 1994, but no further action has been taken,                    
             and petitioner and Mr. DiMichele continue to live                        
             together in the house located at 2010 South 15th Street.                 
                  Respondent issued two notices of deficiency to                      
             petitioners, one for 1985 and one for 1986.  The principal               
             adjustment made by respondent to the DiMicheles' 1985                    
             income tax return was to increase the gross income reported              
             on the return by $720,000, the amount respondent determined              
             that Mr. DiMichele had received from the sale of drugs                   
             during 1985, and to allow a deduction of $180,000 for the                
             cost of drugs sold during the year.  For the year 1986,                  
             respondent made two adjustments.  Respondent increased the               
             DiMicheles' gross income by $34,000, the amount of the                   
             long-term capital gain realized from the sale of the                     
             properties located at 506, 508, and 510 Fitzwater Street,                
             and increased petitioners' gross income by $31,748, the                  
             amount of unreported bank deposits during the year.                      

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Last modified: May 25, 2011