Jerry S. Payne - Page 47

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               Petitioner submitted to banks and other businesses and                 
          governmental entities false copies of his income tax returns and            
          false financial and other information.                                      
               For 1988, petitioner reported gross receipts of $189,788,              
          disregarding a Form 1099 from 2618 Inc reflecting nonemployee               
          compensation to petitioner of $281,176.                                     
               We are not persuaded by petitioner's arguments that he                 
          innocently and inattentively bungled his tax affairs.  In light of          
          the evidence, we view petitioner's assertions of ignorance and              
          unsophistication as simply another attempt by petitioner to obscure         
          the facts.                                                                  
               For 1987 and 1988, we conclude that the increases to                   
          petitioner's taxable income that we have sustained herein (relating         
          to bank deposits, disputed checks not deposited into petitioner's           
          bank accounts, cash withdrawals from the Club, and deductions that we       
          have not allowed) are attributable to fraud.                                
               For 1988, we note that the increase to petitioner's taxable            
          income relating to petitioner's receipt of the stock of 2618 Inc is         
          also attributable to fraud.  We view petitioner's failure to report         
          any amount as income in connection with his receipt of the stock as         
          part of petitioner's fraudulent conduct.  We recognize the                  
          difficulties in valuing the stock.  Our valuation, however, is              
          supported by petitioner's representations as to the value of 2618 Inc       
          and by the outstanding legal fees in excess of $500,000 for which the       






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