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On June 11, 1993, respondent issued a notice of deficiency,
which determined deficiencies in petitioners' Federal income
taxes and additions to tax as follows:5
Additions to Tax
Year Deficiency Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661
1985 $38,140 $36,201 50 percent of $5,847
the interest due
on $23,388
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6661
1986 $256,295 $34,692 $88,473 50 percent of the $28,401
interest due on
$113,605
1987 12,973 -- 12,791 50 percent of the 3,124
interest due on
$12,497
In addition to the adjustments contained in the 30-day letter,
respondent determined that Mr. Burke had failed to report
$330,615 in premium funds which he had embezzled from U.S. Life.
Respondent also determined additions to tax for delinquent
filing, fraud, and substantial understatement. Respondent did
not issue a second 30-day letter prior to issuance of the notice
of deficiency.
On August 30, 1993, Attorney Michael N. Balsamo filed the
original petition in this case on behalf of both petitioners.
The petition stated in several places that the returns were
jointly filed:
5In her answer, respondent asserted an increased deficiency
and additions to tax for 1986.
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