Richard and Brenda Nelon - Page 4

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               Petitioner received compensation in the amounts and years at           
          issue:                                                                      
               Year           Amount              Payer                               
               1986           $24,026        Bristol Industries, Inc.                 
               1986           142,338        Gilkey Lumber Co.                        
               1987           249,006        Gilkey Lumber Co.                        
               1988           241,859      Gilkey Lumber Co.                          
               1989           293,790   Gilkey Lumber Co.                             
               1990           254,340        Gilkey Lumber Co.                        
               1991           295,872        Gilkey Lumber Co.                        
          The payers supplied Forms 1099 to respondent and petitioner                 
          reflecting the above-listed payments.  During the aforementioned            
          years, petitioner did not make any estimated payments of income             
          tax.  Petitioner also did not file any income tax returns for the           
          years at issue.  Petitioner maintained some records of his                  
          expenses for his logging business in the form of receipts, which            
          he could not locate for purposes of trial.                                  
               Sometime in 1985, petitioner hired Larry R. Melton (Melton)            
          to paint his residence.  Melton, who was not a qualified tax                
          adviser, was involved in a tax protester group.  The primary                
          precept of members of the protester group was that they were not            
          subject to Federal income taxes.  Consonant with that belief,               
          Melton advised that petitioner was not required to pay taxes to             
          the U.S. Government.  Petitioner accepted Melton's advice, and he           
          joined the protester group, attended meetings, and paid dues                
          during 1987 and 1988.  Beginning with his 1986 taxable year,                
          petitioner did not file a Federal income tax return in accord               






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