T.C. Memo. 1998-337
UNITED STATES TAX COURT
ROBERT E. ILES and MONICA M. ILES, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 38917-87. Filed September 22, 1998.
Petitioners (Ps) were (1) trustees for several trusts
and (2) principal owners of numerous business entities, some
of which were incorporated. The business entities provided
financial and tax planning services. Many of the trusts
held money that people invested in the tax shelters that Ps’
businesses offered. During the years in issue, Ps caused
many of the trusts and some of the business entities to
write checks directly to Ps or to third parties on Ps’
behalf to pay for Ps’ investments and personal expenses. By
amendment to answer, respondent asserted Ps had omitted
additional items of income. Ps did not timely file tax
returns for 1980, 1981, or 1982. When those returns were
finally filed, Ps did not report as income most of the
payments those entities made to Ps or to third parties on
Ps’ behalf. Petitioner husband (H) was the driving force,
with petitioner wife (W) providing computer and accounting
skills to their joint activities. Respondent and W filed a
Stipulation of Settled Issues which conditionally disposed
of all issues concerning W’s liabilities in this case.
1. Held: Ps had substantial underpayment for 1980,
1981, and 1982. Sec. 6653(c)(1), I.R.C. 1954.
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