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All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
Petitioner, an attorney, maintained a personal injury law
practice in the Koreatown section of Los Angeles. Respondent
contends, among other things, that petitioner received and cashed
over 160 checks throughout the years in issue, failed to report
the income from these checks, and fraudulently and with the
intent to evade taxes understated his income from his law
practice for the years in issue. Petitioner contends that he
never received the proceeds from these checks. Rather, he argues
that his office manager, who had effective control of the law
office, cashed the checks, paid the clients and the medical
providers, and kept any remaining amounts without petitioner's
knowledge.
After concessions, the issues for decision are:1
1 On Oct. 24, 1996, the parties filed a stipulation of
settled issues. In that stipulation, the parties agreed as
follows: (1) If any of the insurance settlement checks at issue
in this case are found to constitute previously unreported gross
receipts of petitioner for the years at issue, petitioner's gross
income from each included check is equal to one-third of the face
amount of the check; (2) no portion of two checks for $7,200 and
$1,880 in 1989 is to be considered income to petitioner; and (3)
there was a duplication of insurance settlement checks in the
computation of the total amount of checks in 1990 in the amount
of $15,000. Therefore, the total amount of settlement checks for
1990 should be $258,965.
On brief, petitioner admits that he omitted from income
settlement checks that were deposited into his Mitsui
Manufacturers Bank account in 1991.
Furthermore, respondent determined that petitioner is liable
(continued...)
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