Wayne E. and Dorothy E. Wells - Page 10

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                    30. Each of the Forms 1040 contain the petitioner                 
               Wayne E. Wells' name and address.  On line 7 for wages,                
               salaries, tips, etc., was written the word "Estimated."                
                    31. The respondent processed the 1040 for 1986 as                 
               a valid, albeit delinquent, federal income tax return,                 
               but the respondent determined that the Forms 1040 for                  
               1987, 1988 and 1989 were not valid returns and did not                 
               process them as valid returns.                                         
                    32. The respondent used Bureau of Labor                           
               Statistics to partly or wholly determine the income for                
               petitioner Wayne E. Wells during the four tax years                    
               1986, 1987, 1988 and 1989.  The respondent used the                    
               income figures of all urban consumers for a family of                  
               four living in Dallas, Texas, at the intermediate                      
               family level, relying on 1981 as the base year, when                   
               petitioner's Wayne E. Wells income was $22,678.00.                     
               Those computations are reflected in the three-page                     
               Exhibit 13-M.                                                          
                    33. Based solely on those Bureau of Labor                         
               Statistics figures, petitioner Wayne E. Wells had                      
               partial earned gross income for the taxable years 1986,                
               1987, 1988 and 1989 in the amounts of $27,341.00,                      
               $28,325.00, $61,672.00 and $30,902.00, respectively.                   
                    34. From January 1, 1986, to April 8, 1986,                       
               petitioner Wayne E. Wells earned income from Casualty                  
               Reciprocal Exchange reported on a Form W-2 in the                      
               amount of $13,419.36; that amount was included by the                  
               respondent as part of the earned gross income for 1986                 
               of $27,341.00.                                                         
                    35. The respondent also determined that                           
               petitioner Wayne E. Wells' received additional income                  
               during the taxable year 1988 when his profit-sharing                   
               plan with the Dodson Group, of which Casualty                          
               Reciprocal Exchange was a member and the petitioner's                  
               actual employer, was liquidated.  It was liquidated                    
               when the IRS seized the money to pay off past                          
               assessments.  This amount was $32,185.00 and was                       
               received from the trustee, United Missouri Bank of                     
               Kansas City, Trust Division.  The respondent also                      
               determined that petitioner Wayne E. Wells received                     
               additional income in 1988 in the form of interest from                 
               the U.S. Treasury Department, in the amount of $30.00.                 






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