- 15 -15
started at 9 a.m. and Agent Red was advised that Abraham had to
leave by 10 a.m. for a court appearance. Abraham failed to
respond to many of the questions put to him at the summons
conference. Abraham stated that he had outstanding loans to
Lawrence during 1987. He further stated that he did not know the
terms of the loans, other than that the interest he charged her
was minimal.
IV. The Notices of Deficiency
On December 26, 1991, respondent issued a notice of
deficiency to Lawrence determining deficiencies in her 1986 and
1987 Federal income taxes in the amounts of $273,222 and
$793,894, respectively. Respondent also determined that she was
liable for various additions to tax for those years. The
deficiencies resulted from the following adjustments to her
income:
Description 1986 1987
Income $563,635 $2,065,546
Contract labor 1,636
The notice of deficiency with respect to the Abrahams was
issued by respondent on December 31, 1991, in which a deficiency
in their 1987 Federal income tax in the amount of $908,168 was
determined. Respondent also determined that they were liable for
various additions to tax for the year in issue.
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