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Schedule C attached to the 1984 return lists opening inventory as
"First Year 0".
Respondent's Revenue Agent Ellen Loeb (Ms. Loeb) conducted
an audit of petitioners' 1985 tax return. Petitioners told Ms.
Loeb that they had been retired since 1976, and then started
their current business in 1984. In response to Ms. Loeb's
inquiry about their 1985 bank accounts, petitioners failed to
disclose the King-Air account at Indian Rocks.
Previous Litigation
Petitioners were convicted on December 14, 1990, of
attempting to evade their 1984 through 1986 income tax
liabilities in violation of section 7201 and of conspiracy
beginning in 1983 and continuing thereafter to defraud the United
States in violation of 18 U.S.C. sec. 371 (1994) by attempting to
evade and defeat the income tax they owed in violation of section
7201. This Court issued its opinion in the civil case for those
taxable years in Miravalle v. Commissioner, T.C. Memo. 1994-49.
Respondent's Determination
Using information contained in petitioners' bank records,
respondent determined the following with respect to petitioners'
taxable income for the years currently at issue:
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Last modified: May 25, 2011