Maurice D. and Elinor Taylor - Page 11

                                                    - 11 -11                                                      

             The 1990 return reported gross income before adjustments of $5,791.                                  
             Petitioners never filed amended returns.                                                             
                    Mrs. Taylor knew that petitioners had not filed tax returns                                   
             for the years in issue. In January 1992, when she signed the                                         
             delinquent returns, Mrs. Taylor knew about the existence of                                          
             petitioner's check-kiting  scheme.  She  also  knew  about  the                                      
             grocery/convenience store business but never questioned why income                                   
             from that business was not reported on the delinquent returns.                                       
             Notice of Deficiency                                                                                 
                    In the notice of deficiency, respondent determined unreported                                 
             net income from the grocery/convenience store business through an                                    
             analysis of the bank deposits, ledger notations, Department of                                       
             Treasury statistics, and industry guidelines.  The unreported net                                    
             income was determined to be $72,919 for 1988, $102,370 for 1989,                                     
             and $87,877 for 1990.  Respondent further determined petitioners                                     
             had unreported income in 1988 from petitioner's check-kiting scheme                                  
             in the amount of $300,698.5                                                                          
                    Respondent determined that petitioners were liable for the                                    
             fraud addition to tax for 1988, or in the event respondent's fraud                                   
             determination is not sustained, an addition to tax for negligence                                    
             or disregard of rules or regulations, an addition to tax for                                         
             substantial understatement of tax, and an addition to tax for                                        
             failure to timely file a Federal tax return.  For 1989 and 1990,                                     

                    5     See supra note 2.                                                                       

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011