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The following amounts were paid by FBI solely for the
personal benefit of Mathers, Jr.:
Year Amount
1982 $28,947.29
1983 25,811.92
1984 18,363.25
1985 25,667.61
1986 9,269.58
The parties have stipulated that, if any of the amounts paid by
FBI for the personal benefit of petitioner or Mathers, Jr. are
taxable to petitioner, they constitute constructive dividends
from FBI.
Petitioner was audited in the 1960's. In 1972, this Court
decided that he had unreported taxable income in 1964; an opinion
was rendered as Mathers v. Commissioner, 57 T.C. 666 (1972).
Petitioner did not file individual Federal income tax returns for
any year from 1974 through 1986. In late 1983, the Internal
Revenue Service began an audit of petitioner. After the initial
interview, it became apparent that FBI was the source of
petitioner's funds. The audit expanded to include FBI as well as
petitioner. Because of petitioner's failure to keep personal
income records, it was necessary to use the FBI records to
reconstruct petitioner's income. Petitioner was given time to
organize the records of FBI and to file amended returns for FBI
for the years in issue. The audit took 4 years to complete
because of the lack of financial records for petitioner and FBI.
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Last modified: May 25, 2011