Edward A. Wagner - Page 6

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          one of the witnesses at the trial, that petitioner initiated an             
          audit of the distributor and a lawsuit against the general                  
          partner when the profit was not paid to the partners, and that at           
          trial the prosecutor's argument about Caldwell only referred to             
          witnesses who did not incriminate petitioner on this point, made            
          no effort to prove that petitioner intended to evade tax, and did           
          not prove that petitioner knew that the Caldwell deal was based             
          on an inflated purchase price or otherwise would lead to an                 
          evasion of tax.  There was evidence at trial that can reasonably            
          be interpreted to support many of these assertions.                         
               On January 21, 1988, respondent sent petitioners two                   
          statutory notices, one for 1974 and 1975 and the other for 1973,            
          1976, 1977, and 1978.3  On April 18, 1988, petitioners timely               
          filed their petition with this Court.4  When petitioners filed              
          their petition, they resided in Harrison, New York.                         

               3These notices contained determinations, now conceded by               
          respondent, that petitioner was liable for the fraud addition to            
          tax for all 6 years from 1973 through 1978 (not just for 1975),             
          and also that petitioner had received “profit from movie deals”             
          (i.e., skim income) in 1975 and 1976.                                       
               4Petitioners' case in this Court was consolidated with those           
          of petitioner's coconspirators and their spouses, but those other           
          cases have since been severed by reason of the comprehensive                
          settlements that have been reached in them, in which, as                    
          indicated in the text, supra, the other conspirators have                   
          conceded receipts of varying amounts of skim income and fraud               

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