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relevant years, Mr. Morris' embezzlement scheme involved his
depositing funds belonging to John Kenny Company into the bank
accounts of the following corporations and other entities that he
controlled: Accu-Data; Illinois Land Trust No. 031-663-768,
Champaign National Bank, Trustee (Trust 768); Meadows; and Mid
Central Illinois Co. (MCIC). During the years 1987, 1988, and
1989, Mr. Morris embezzled $70,547, $73,185, and $43,101, respec-
tively, from John Kenny Company that was not reported in the
respective joint returns for those years (unreported embezzlement
income).5
5 In the notice, respondent determined that Mr. Morris embezzled
$102,972.40, $128,092.34, and $129,046.26 during 1987, 1988, and
1989, respectively, and that, of the total funds that he embez-
zled during each of those years, Mr. Morris reported $32,425 as
gross receipts of Accu-Data during 1987, $54,907.13 as gross
receipts of Accu-Data and Meadows during 1988, and $85,944.95 as
gross receipts of Accu-Data and Meadows during 1989. Respondent
further determined that the differences (1) for 1987 between the
total amount of embezzled funds and the amount of such funds
reported in the corporate returns of Accu-Data covering 1987 and
(2) for each of the years 1988 and 1989 between the total amount
of embezzled funds and the aggregate amount of such funds re-
ported in the corporate returns of Accu-Data and Meadows covering
those years were the amounts of such funds that were omitted from
the joint returns that petitioner and Mr. Morris filed for those
years (viz., $70,547 for 1987, $73,185 for 1988, and $43,101 for
1989). In determining how much of the embezzled funds Mr. Morris
reported for 1987 as gross receipts of Accu-Data, respondent
added one-half of the gross receipts reported in the U.S. corpo-
ration short-form income tax return (Form 1120-A) that Accu-Data
filed for its taxable year ended June 30, 1986, and one-half of
the gross receipts of $35,211 reported in the Form 1120-A that it
filed for its taxable year ended June 30, 1987, and reduced that
sum by certain income of Accu-Data that she determined did not
relate to the embezzled funds. Similarly, in determining how
much of the embezzled funds Mr. Morris reported as gross receipts
of Accu-Data (1) for 1988, respondent added one-half of the gross
(continued...)
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