Joan Walters, f.k.a. Joan Gherman, and Henry Gherman - Page 41

                                       - 41 -                                         

          with a transaction date after Mr. Gherman fled the country.  We             
          are not persuaded that either Mr. Gherman or Ms. Walters                    
          exercised any dominion or control over those funds.  We further             
          reduce the net amounts reflected on the CD schedule by the                  
          purported interest paid to CD participants.  Those payments also            
          appear to be an integral part of the CD scheme and helped to                
          perpetuate the fraud and are accordingly treated as an expense of           
          the illegal activity.                                                       
               Additionally, we reduce the net amounts reflected on the CD            
          schedule by amounts that we believe petitioners already included            
          in income in the form of Form W-2 wages from FIP.  FIP paid wages           
          to Mr. Gherman for all of the years in issue and to Ms. Walters             
          for year ended 1984, which petitioners reported on their tax                
          returns.  A portion of the wages paid to petitioners by FIP would           
          have been paid from gross receipts.  For each of the years in               
          issue, however, FIP operated at a loss.  Mr. Gherman used a                 
          portion of the embezzled moneys to fund FIP's operations,                   
          including petitioners' salaries.  Consequently, for each year we            
          reduce the net amount embezzled by the lesser of the Form W-2               
          wages reported on the return or FIP's reported net operating                
          loss.  Accordingly, we hold that the unreported income (rounded)            
          for the years in issue is as follows:                                       








Page:  Previous  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  Next

Last modified: May 25, 2011