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o). During the taxable year 1994, petitioner was
engaged in illegal, drug-related, income-producing
activities.
p). During 1994, petitioner derived substantial
unreported income from the aforementioned business
activities.
q). For the taxable year 1994, petitioner failed
to maintain complete books and records of his income-
producing activities as required by the applicable
provisions of the Internal Revenue Code and the
regulations thereunder.
r). The records that were maintained by or on
behalf of petitioner for the taxable year 1994 were
deceptive, incomplete, and failed to disclose all of
petitioner’s receipts, and were not properly reflective
of the complete, correct income of petitioner.
s). Petitioner also engaged in numerous
activities using large quantities of currency during
1994 and other years, and used friends and relatives to
hold title to his assets and to register telephones,
beepers and utilities, all to evade recordkeeping
requirements, and to avoid a “paper trail” of his
receipt of income, and accumulation of assets, and
thereby his true federal income tax liability.
t). Due to the failure of petitioner to maintain
adequate books and records of his income-producing
activities, the secretive nature of his illegal
business activities involving drugs, his use of large
amounts of currency and nominees to avoid the
respondent’s detection of his income, expenses, and
accumulation of assets, and his failure to report his
true taxable income, the respondent has been required
to determine, and has determined, the petitioner’s
correct taxable income for the taxable year 1994 under
the cash expenditures method of reconstructing income.
u). In making her determination of the
petitioner’s correct taxable income for the taxable
year 1994, the respondent has utilized all records,
memoranda and other sources of information that were
available.
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