- 10 -
respondent's determination is presumed correct, and petitioner
bears the burden of proving it erroneous.
Petitioner contends that he earned the embezzled funds as
fees for his services. Alternatively, he contends that he
borrowed $300,000 from Ms. Boals. Petitioner failed to introduce
sufficient evidence to support either contention. Petitioner
also contends that because he has filed a petition for
discretionary review with the Court of Criminal Appeals for the
State of Texas, his conviction is not yet final and may not be
used against him. He is mistaken. To be held liable for tax on
embezzled income, there is no requirement that there be a prior
judicial determination that an embezzlement has occurred. This
Court is permitted to make its own independent determination.
See, e.g., Snavely v. Commissioner, T.C. Memo. 1994-256; Solomon
v. Commissioner, T.C. Memo. 1982-603, affd. 732 F.2d 1459 (6th
Cir. 1984); Beaton v. Commissioner, T.C. Memo. 1980-413, affd.
664 F.2d 315 (1st Cir. 1981). We have reviewed the record and
determined that petitioner embezzled the funds from Ms. Boals.
Accordingly, we conclude that petitioner received embezzlement
income in 1988 and 1989 and sustain the deficiencies resulting
from that income as determined by respondent.
B. CPI Rollover Method Calculations
Every taxpayer is required to maintain adequate records of
taxable income. Sec. 6001. In the absence of such records, the
Commissioner may reconstruct the taxpayer's income by any method
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011