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In establishing an exempt organization for a client,
petitioner submitted the required filings to the State of Nevada,
and obtained exempt status from the Internal Revenue Service.
Records maintained by the State of Nevada indicate that
petitioner established at least 224 exempt organizations during
the 1992 taxable year. Eleven exempt organizations were
established by petitioner for his personal use, which used the
address of petitioner’s residence, at 634 East Yale Street in
Ontario, California, or petitioner’s office, at P.O. Box 2030 in
Upland, California, as a business address. The other 213 exempt
organizations established by petitioner during 1992 were
established for petitioner’s clients. Petitioner was named as a
vice president of all of these exempt organizations.
During the year 1992, petitioner charged his clients $3,000
for each exempt organization he established. Accordingly,
petitioner derived at least $639,000 of income from his business
of establishing exempt organizations during 1992.
For the taxable year 1992, petitioner, fraudulently and with
intent to evade income tax, filed a false Federal income tax
return which omitted income. Petitioner and his wife, Luetta M.
Tully, (Mrs. Tully) filed a joint U.S. Individual Income Tax
Return, Form 1040 (hereinafter “1992 return”).4 On their 1992
4 Based upon the same notice of deficiency, Mrs. Tully filed
a separate petition, and is a petitioner in a related case docket
No. 21035-96, also currently before this Court.
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Last modified: May 25, 2011