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On January 6, 1983, Special Agents of the IRS served petitioner
with a subpoena related to the investigation.
On May 31, 1983, Savage (formerly E & A of California) filed
a Form 1120, U.S. Corporation Income Tax Return, for the fiscal
year ending (FYE) September 30, 1982. Petitioner signed the
return as "Pres."11 Included in the gross receipts reported on
the return of Savage were all currency and money order deposits
to the Killeen and Medina accounts12 and all expenditures by
money order for corporate expenses13.
On March 23, 1987, petitioner was indicted in the United
States District Court for the Northern District of Illinois on 3
counts of violations of section 7206(1).14 In the indictment,
petitioner was accused of filing false individual income tax
returns which understated his taxable income for each of the
11Petitioner dated his signature as 6/1/83. On Schedule J
of the return, line H(2) indicates that an individual or entity
owns 100% of the voting stock of Savage, the reporting
corporation. Also attached to the return is a schedule entitled,
"Other Business Deductions" on which it is noted that the
individual with 100% ownership of Savage voting stock is "Steven
Toushin". The record contains no documentation on the change of
corporate presidency or nominal ownership of Savage stock from
Mr. Killeen to petitioner.
12Reported gross receipts of Savage also included deposits
of money orders into various bank accounts at the "Hibernia Bank"
held in the name of either E & A of California or Savage.
13The corporate expenses were deducted at the appropriate
place on the Form 1120.
14United States v. Toushin, No. 87CR206-1 (N.D. Ill. filed
Mar. 26, 1987).
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