Henry Hardy - Page 12

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          taxpayer's income from prostitution.  Cooper v. Commissioner,               
          T.C. Memo. 1987-303.                                                        
               In cases of unreported illegal income, respondent must                 
          establish that the deficiency determination is supported by a               
          proper foundation of substantive evidence.  Weimerskirch v.                 
          Commissioner, 596 F.2d 358, 362 (9th Cir. 1979), revg. 67 T.C.              
          672 (1977).  In this case, petitioner admits that the source of             
          his income was from Stardust.  Only the amount of income is in              
          dispute.                                                                    
               Respondent substantiates her assertion of unreported income            
          with the calendars, the purported business records of Stardust,             
          the evidence of petitioner's expenditures not explained by                  
          reported income, and testimony of petitioner and several of the             
          models.  Respondent maintains that petitioner's business records            
          are inaccurate representations of the number of models' sessions.           
               Petitioner argues that the transcribed business records are            
          accurate and that they bear resemblance to the originals                    
          sufficiently to show that petitioner is not liable for additional           
          tax.  Petitioner argues that he had the originals copied because            
          they were stained with coffee or cola and that the originals                
          "turned up missing" after the police executed a search warrant at           
          Stardust.                                                                   
               At the criminal trial and at trial of this case, various               
          models testified consistently about walk-in customers, length of            
          sessions, triangle sessions, and outcalls.  Their testimony was             




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