Kenneth Siebert - Page 10

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          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            




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