- 5 -
increased dramatically during the years in issue. He concluded
that the decedent and Mrs. Spear skimmed cash from the parking
lot businesses and used corporate funds for their personal
benefit without reporting them as income.
Trepple attended the decedent's and Mrs. Spear's criminal
trial in December 1982 and January 1983. During that trial, the
decedent and Mrs. Spear claimed for the first time that the
decedent's father, Abe Spear, had given the decedent $380,000 in
cash in 1957. The decedent testified about his father's will,
the will contest, and the fact that his father pawned family
jewelry and borrowed money, including $1,000 from the decedent's
sister, Sadie.
C. Notice of Deficiency
Respondent issued the notice of deficiency in this case on
December 23, 1986. On February 6, 1987, the decedent and Mrs.
Spear filed a petition in this Court. Petitioners did not
contest respondent's use of the net worth method or respondent's
net worth computation, except they contended that they had more
opening cash on hand than respondent allowed, and that payments
to them from their closely held corporations were nontaxable loan
repayments. Petitioners also disputed that they were liable for
the addition to tax for fraud.
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