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(a) During each of the taxable years 1987 and 1988, the
petitioner owned and operated Papa's Restaurant in
Schnecksville, Pennsylvania, a sole proprietorship.
(b) During the taxable years 1987 and 1988,
petitioner's restaurant earned gross receipts of $900,510.38
and $977,136.00, respectively. On his original income tax
returns for 1987 and 1988, petitioner reported gross
receipts of $363,732.00 and $407,503.10, respectively.
(c) During the taxable years 1987 and 1988,
petitioner's cost of goods sold were $466,628.78 and
$514,119.57, respectively. On his original income tax
returns for 1987 and 1988, petitioner reported cost of goods
sold of $114,094.14 and $131,412.90, respectively.
(d) The petitioner understated his taxable income on
his income tax returns for the taxable years 1987 and 1988,
in the amounts of $192,429.16 and $193,253.20, respectively.
(e) The petitioner understated his income tax
liabilities on his income tax returns for the taxable years
1987 and 1988 in the amounts of $68,912.50 and $62,153.90,
respectively.
(f) Petitioner Adel Abdalla fraudulently and with
intent to evade taxes for the taxable years 1987 and 1988,
filed false income tax returns for said years that omitted
the skimmed cash receipts and understated cost of goods
sold.
(g) Respondent's determination of the omission of
income and cost of goods sold is corroborated by the fact
that petitioner filed two documents captioned "Amended
United States Individual Income Tax Returns" for the years
1987 and 1988 with the Internal Revenue Service Center in
Philadelphia, Pennsylvania including all the omitted income
for these years. These amended returns were received at the
Internal Revenue Service Center on December 4, 1989. Said
documents were not sent to the Internal Revenue Service
Center until the Examination Division had contacted the
petitioner regarding his 1987 and 1988 federal income tax
returns.
(h) Respondent's determination of the understatement of
cost of goods sold has also been corroborated by documenting
cost of goods sold through contact with petitioner's
suppliers.
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