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return, petitioner and Mrs. Tully reported Mrs. Tully’s net wages
received from the State Teacher’s Retirement System and the
Ontario-Montclair School District in the amount of $24,527.39.
On their 1992 return, petitioner and Mrs. Tully reported Mrs.
Tully’s interest income, received from the Ontario School
Employee Credit Union, in the amount of $124.
With the 1992 return, petitioner filed a Schedule C,
Statement of Profit and Loss from Business, for All American
Financial Services (All American). On his Schedule C, petitioner
stated that All American was a sole proprietorship in the
business of financial consulting and marketing. On his Schedule
C, petitioner reported gross receipts derived from All American
in the amount of $18,500. During the taxable year 1992,
petitioner received at least $639,000 of income, derived from his
business of establishing exempt organizations. Thus, petitioner
earned and intentionally failed to report Schedule C income in
the amount of $620,500.
Petitioner fraudulently and with the intent to evade income
tax understated taxable income for the 1992 taxable year in the
amount of $620,500. Petitioner fraudulently and with the intent
to evade income tax understated his tax liability for the taxable
year 1992 in the amount of $176,399.
In the notice of deficiency, respondent determined, inter
alia, that petitioners omitted $620,500 of income. Consistent
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