Charles L. Wynn, Jr. - Page 7

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          Petitioner's total cash expenditures during 1986 equaled at least           
          $126,911.                                                                   
               Petitioner filed his 1986 return on or after December 1,               
          1988.  In that return, petitioner reported that he received the             
          following items of gross income from the payors indicated:                  
                    Payors                              Amount                        
                    Mingles, Inc.                      $3,651.50                      
                    Eduardo, Inc.                      298.07                         
                    Eduardo, Inc.                      1,400.00                       
                    Britex, Inc. T/A Linea Pitti       457.14                         
                    C & I, Inc. T/A Linea Pitti        3,542.86                       
                    State and local income                                            
                    tax refund                         258.00                         
               Total                            9,607.57                              
               During 1986, petitioner received $26,000 in gross income               
          from operating a car wash business that his father and he owned             
          and that was known as Custom Car Salon.  Petitioner did not                 
          report any portion of that $26,000 in the return that he filed              
          for 1986.                                                                   
               Petitioner did not maintain any books or records for 1986              
          relating to his income-producing activities.  In examining                  
          petitioner's taxable year 1986, respondent reconstructed peti-              
          tioner's income pursuant to the cash expenditures method and                
          determined in the notice of deficiency (notice) that petitioner             
          had unreported income of $122,461 for that year.                            
               On May 25, 1989, a Federal grand jury indicted petitioner              
          on, inter alia, over 50 counts of violating 18 U.S.C. sections              
          1956(a)(1)(B)(i) and 1957 (1994) involving the laundering of                
          proceeds of specified unlawful activity and criminally derived              



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