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6. Petitioners maintained no sales invoices or
other records relating to the illegal sales of
narcotics during 1991.
7. On June 18, 1991, Dennis J. Deneault was
arrested by the St. Lucie County Sheriff's Office for
the possession and attempted sale of marijuana.
8. During questioning by the St. Lucie County
Sheriff's officers on June 18, 1991, Dennis J. Deneault
disclosed that on June 17, 1991, he had purchased ten
pounds of marijuana for $18,500, and that on June 18,
1991, he had purchased 17 pounds of marijuana for
$25,000.
9. During the execution of a search warrant in
1991, $300.00 in cash was seized from a pickup truck on
the petitioners' real property.
10. The petitioners filed a joint 1991 Federal
income tax return on April 15, 1992, on which they
reported adjusted gross income of $5,882.00. The
petitioners reported $3,177.00 in wages, and $2,976.00
of business income from Dennis J. Deneault's business
as a wire lather.
11. The respondent has determined petitioners'
correct taxable income for 1991 on the basis of the
source and application of funds method based on
information provided from petitioners' joint 1991
Federal income tax return, information secured from
files relating to the arrest and conviction of Dennis
J. Deneault in 1991, and information provided by
petitioners during a hearing with the Appeals Division,
as follows:
SOURCES
(a) Petitioners reported taxable interest
income of $3.00 on their joint 1991 Federal income tax
return.
(b) Petitioners reported gross receipts of
$4,500 from their Schedule C activity for 1991 on their
joint 1991 Federal income tax return.
(c) During 1991, the petitioners received a
Federal tax refund in the amount of $1,253.00, relating
to the taxable year 1989.
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