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trustee in determining who received funds from M&L during the 1-
year period (from October 1989 through October 1990) prior to the
filing of M&L's bankruptcy petition. The firm determined that
during this period M&L transferred $375,452.01 to petitioner and
that petitioner transferred $46,162 to M&L. The trustee then
filed suit to recover funds from petitioner. On February 8,
1994, the bankruptcy court entered a judgment for $375,534.01
against petitioner. Petitioner subsequently reached an agreement
requiring him to periodically remit 15 percent of his net income
to the trustee.
Petitioner filed his 1988 and 1989 Federal income tax
returns on April 26, 1991, and his 1990 return on December 28,
1992. In October of 1993 Gudrun Stacks, the IRS agent assigned
to audit petitioner's returns, asked petitioner to provide bank
and other records relating to M&L investments. On several other
occasions Agent Stacks requested such records, but petitioner did
not provide them. Other sources subsequently provided Agent
Stacks with copies of M&L checks made payable to petitioner and
petitioner's bank records. Agent Stacks analyzed bank records
relating to petitioner's 1988 and 1989 tax years and examined M&L
checks issued to petitioner during his 1990 tax year. Upon
completing her analysis, Agent Stacks determined that petitioner
had unreported income of $72,415, $386,663, and $165,822 for
1988, 1989, and 1990, respectively.
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Last modified: May 25, 2011