- 5 -
During the investigation, petitioner denied having income
from wages, dividends, sales of assets, gifts, or inheritances.
Petitioner represented at one point that his average cash on hand
was $100, but later represented that he had up to $10,000 cash in
a safe in his house. Petitioner indicated to the investigating
agents that his source of funds was the repayment of loans he
made to FBI some years earlier. Petitioner asserted to the
agents that the loans were made to FBI out of proceeds he
received from sales of several furniture stores during the late
1960's and early 1970's. During the audit, petitioner did not
produce any documentary evidence, such as promissory notes or
repayment schedules, to verify his claim of such loans to FBI.
Petitioner prepared and filed Federal income tax returns for
FBI from 1982 to 1985. The 1982 and 1984 returns were each filed
approximately 1 year late. The corporate returns did not report
any compensation paid to officers or dividends paid to
shareholders, although Mathers, Jr. was an officer and received a
salary from the corporation.
Schedule L of Form 1120, U.S. Corporation Income Tax Return,
on the FBI returns set forth balances in the "Loans from
stockholders" entry and in the "Mortgages, notes, bonds payable
in 1 year or more" entry (collectively referred to as loans from
stockholders) between 1982 and 1985, which allegedly represented
the loans made to FBI by petitioner. The balances shown
decreased, however, by only $36,000 between 1982 and 1985. This
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011