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(a) Prior to and during the year 1989, petitioner,
Timothy Charles Sadlier, was extensively involved in
gambling, especially horse and dog races. Also, prior
to and during 1989, petitioner was involved in other
business activities, whether illegal or legal, which
required the reporting of income.
(b) During the year 1989, the petitioner derived
unreported taxable income from the aforementioned
business activities as well as additional unreported
rental income and interest income.
(c) The records maintained by petitioner for the
taxable year 1989 were inadequate in that they were
incomplete and failed to disclose all sources of income
and did not properly reflect the correct taxable income
of petitioner.
(d) The petitioner's failure to maintain complete
and accurate records of his income-producing activities
and his failure to produce complete and accurate
records for respondent in connection with the
examination of his income tax return for the taxable
year 1989 were fraudulent acts conducted by petitioner
with the intent to evade tax for the taxable year 1989.
(e) Because of the petitioner's failure to
maintain adequate books and records of his income-
producing activities, his refusal to cooperate with
respondent's examining agents, and his failure to
voluntarily report his federal income tax for the
taxable year 1989, the respondent has determined the
petitioner's correct taxable income for the taxable
year 1989 by the use of a combination sources and
application of funds and specific item method of
reconstructing income. In making her determination,
the respondent has utilized all records, memoranda and
other sources of information which were available.
(f) Petitioner is an admitted gambler of many
years and was clearly aware that all gambling income
was includable in income in the year of receipt.
(g) Petitioner also had an extensive history of
arrest involving the distribution of marijuana
paraphernalia.
(h) During 1989, petitioner received the following
sources of funds totaling $70,901:
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