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Item 1987 1988 1989
Ordinary income from
business activity $6,747 $7,280 $5,359
Guaranteed payment 29,900 32,900 31,500
Total 36,647 40,180 36,859
In 1990, petitioner was the target of a criminal
investigation. Petitioner was charged with three counts of
willfully and knowingly attempting to evade Federal income tax by
filing false and fraudulent returns. Count 1 pertained to
taxable year 1987, while the second and third counts pertained to
taxable years 1988 and 1989, respectively. Petitioner entered a
guilty plea to count 3.
Petitioners concede that they underreported income in each
taxable year at issue. Petitioners maintain, however, that the
amount of unreported income for each taxable year at issue is
equal to the amount of personal living expenses which petitioner
paid by drawing checks against Fruitland's checking account, plus
one-half of the cashier's checks purchased by petitioner during
the taxable year, less one-half of the amount of cashier's checks
negotiated during the taxable year, less the amount of income
reported as received from Fruitland on petitioners' tax return.
The following table illustrates petitioners' computation of
unreported income for each taxable year at issue:
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Last modified: May 25, 2011