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settled. Petitioner received a settlement payment in the form of
a �570,000 (570,000 pounds sterling) bank draft payable to Swiss
Bank Corp. on or about May 7, 1987.
Petitioner filed his 1987 individual income tax return on
September 15, 1989. He did not report as income the $965,425
determined by respondent to be the dollar equivalent of �570,000
on May 7, 1987.
B. Respondent's Examination and Activities Before Respondent
Issued the Notice of Deficiency
Respondent examined petitioner's 1987 income tax return.
Respondent concluded that petitioner was a director and an owner
of A.T.O., and that he received a �570,000 bank draft payable to
Swiss Bank Corp.
On April 28, 1994, petitioner's counsel sent respondent's
counsel a letter protesting the audit. Petitioner's counsel
contended that petitioner should not have to prove that he did
not receive income and that respondent should not be allowed to
rely on the presumption of correctness. Petitioner's counsel
also objected to the fact that respondent helped the Office of
Child Support Enforcement in Fort Pierce, Florida, to collect
$87,516 in past due child support from petitioner through the
Federal Tax Refund Offset Program.
Petitioner gave respondent a written statement (not under
oath) in which petitioner denied receiving any personal benefit
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