Excess:
This income was unreported and resulted in the conceded
deficiencies in petitioners' Federal income tax as detailed
above. The calculation of petitioners' income was
accomplished using evidence seized in a search of
petitioners' home in Philadelphia. For 1985, respondent
determined that Mr. DiMichele had gross receipts from the
sale of drugs in the amount of $720,000, less cost of goods
sold in the amount of $180,000 and a two-earner deduction
in the amount of $1,876.[S8] For 1986, the increase was
the result of respondent's determination through use of the
bank deposits method of an unreported $34,000 capital gain
and unreported additional income of $31,748.[S9]
The taxable income stated on the DiMicheles' income
tax returns was as follows:
Year Adjusted Gross Income
1985 $36,696
1986 $23,683 [Ex.1,2]
On October 17, 1988, Mr. DiMichele pleaded guilty to
the possession and distribution of methamphetamine in the
U.S. District Court for the Eastern District of
Pennsylvania. He was sentenced to 10 years imprisonment
[E11] and served time in prison from January 1989 to May
1993 when he was released on parole. Mr. DiMichele was
also fined $25,100. The first 1st count which
Mr. DiMichele pled guilty to states that from 1981 through
1987, Mr. DiMichele sold methamphetamine to Michael Madgin,
another drug distributor. [T246-247]
a. Delaware Cash Reserve
Account #8-943701-2
Titled in name of Carl & Eileen DiMichele
(Balance as of 6/25/87: $2,181.13)
b. Home Unity Savings & Loan
Account #21700884-8
Titled in name of Carl & Eileen DiMichele
(Balance as of 6/30/87: $4,546.12)
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