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On September 11, 1990, petitioner filed an amended Federal
income tax return for 1984 showing additional tax due of $24,917,
attributable to recharacterizing as income to petitioner $50,000
paid by INI to Burke’s estate. On October 4, 1990, petitioner
filed an amended Federal income tax return for 1986 showing
additional tax due of $6,551, attributable to recharacterizing as
income to petitioner $17,500 paid by INI to Burke’s estate.
Cutshall, who prepared petitioner’s amended returns, told
petitioner that amounts paid by INI to Burke’s estate could not
be changed to a bonus to petitioner. Nonetheless, Cutshall
prepared petitioner’s amended returns showing amounts paid to
Burke’s estate as income to petitioner. No return or amended
return has ever been filed by INI to reduce the deduction claimed
on its TYE 9/84 return for the accrual of the $100,000 bonus
payable to Burke’s estate. Petitioner has not paid the
additional tax liabilities shown on his amended returns.
Criminal Charges
On March 14, 1991, the Department of Justice presented
proposed charges against petitioner to a grand jury. The grand
jury found no probable cause to indict petitioner for filing
fraudulent tax returns, but returned a true bill indicting
petitioner on three counts of filing false documents with the IRS
in violation of section 7207. The alleged false documents
included June 2, 1987 II, Heirs III, and the INI minutes dated
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