- 3 -
their gross income for 1989 from Meadows Management, Inc. (Mead-
ows), an S corporation? We hold that they did.
(4) Did Mr. Morris receive during 1989 a constructive
dividend in the amount determined by respondent from Accu-Data,
Inc. (Accu-Data)? We hold that he did.
(5) Has the period of limitations for assessment of tax for
1987 expired as to petitioner?3 We hold that it has not.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioner resided in Monticello, Illinois, at the time the
petition was filed.
Mr. Morris' Embezzlement of Funds
During the early to mid-1970's, Mr. Morris was employed by
the Internal Revenue Service as a revenue agent. Thereafter,
beginning in 1977 and throughout the years at issue, Mr. Morris
was employed by John Kenny Co., Inc. as an accountant.4 Mr.
Morris terminated his employment with John Kenny Company on
December 15, 1990.
Mr. Morris began embezzling funds (embezzled funds) from
John Kenny Company several years prior to 1987. During all
3 Petitioner advances no argument about the statute of limita-
tions applicable to 1988 and 1989, and we consider petitioner to
have abandoned any argument with respect thereto.
4 The record refers interchangeably to Mr. Morris' employer as,
inter alia, John Kenny, John Kenny Construction, and John Kenny
Co., Inc. We shall refer to his employer as John Kenny Company.
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