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was disbarred by the Florida Supreme Court, on the complaint of
the Florida bar and an uncontested referee's report, for his
misconduct in handling the Putman estate.
OPINION
The primary issue for decision is whether petitioner's
appropriations of estate moneys constitute income from
embezzlement or whether they are loan proceeds.3 To the extent
petitioner embezzled money from the estate, he has income for
those years under section 61(a). It is well established that
gross income under section 61 includes income earned from illegal
activity, such as the proceeds of embezzlement. James v. United
States, 366 U.S. 213, 219 (1961); Collins v. Commissioner, T.C.
Memo. 1992-478, affd. 3 F.3d 625 (2d Cir. 1993).
Petitioner maintains that amounts he appropriated from the
Putman estate are loans and are not proceeds of embezzlement.
He proffers 28 promissory notes in support. We are entirely
unpersuaded. Whether the transactions between petitioner and the
estate were loans depends ultimately on whether the beneficiaries
3 Respondent does not argue that petitioner is precluded by
the judgments in the criminal, civil, or disciplinary proceedings
against him from arguing that the amounts appropriated by him
should not be included in his gross income. Petitioner does not
argue that the amounts paid to Heartland Management and William
Howard P.A. should be excluded from his gross income on the
ground that they were received by persons other than himself.
The stipulated facts and the entire record require the conclusion
that these names, even if they are entities separate from
petitioner, were alter egos of petitioner and that all receipts
received by them during the years in issue must be attributed to
petitioner.
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