-35-
during 1988. Petitioners claim that the amount they reported,
$1,328, represented unemployment compensation and that the $4,606
amount that respondent claims they failed to report represented
disability compensation. Petitioner, however, has provided
neither explanation nor corroboration of any alleged disability.
Petitioner's testimony was not persuasive. Respondent's
determination that the unreported amounts represented taxable
unemployment compensation will be sustained.
Unreported Income--Kortava
Respondent determined that petitioners failed to report
income received from Kortava during 1990 and 1991. Petitioner
received $292,544 and $275,612, in 1990 and 1991, respectively,
from Kortava. Petitioner returned $165,000 to Kortava in 1991.
Preliminarily, petitioners contend that respondent's proof
at trial and argument on brief do not conform to the notice of
deficiency or to the affirmative pleadings. Petitioners note
that the statutory notice of deficiency and answer refer to
"foreign fund income" as an adjustment to income in the amounts
of $220,000 and $233,566 for 1990 and 1991, respectively. The
notice of deficiency explains this determination as "Supplemental
compensation and bonuses are includable in gross income."
Respondent's answer, in alleging fraud, states: "The petitioners
fraudulently and with intent to evade income taxes failed to
report foreign fund income in the respective amounts of $220,000
and $233,566 during 1990 and 1991 taxable years." Respondent's
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