AJF Transportation Consultants, Inc. - Page 3




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               The parties have agreed that petitioner Carol L. Ferrentino            
          is entitled to innocent spouse relief under the provisions of               
          sections 6013(e) and 6015 for the 1988 and 1989 taxable years.              
               Unless otherwise indicated, all section references are to              
          the Internal Revenue Code in effect for the years in issue, and             
          all Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  
               After concessions by both parties, the remaining issues for            
          decision are: (1) Whether an exception under section 6501(c) to             
          the general 3-year period of limitations on assessment under                
          section 6501(a) applies to petitioners' 1988, 1989, and 1990                
          taxable years; (2) if so, whether petitioners must include                  
          diverted corporate funds in gross income; (3) whether petitioners           
          are liable for the additions to tax for fraud under section                 
          6653(b) for 1988, and the penalties for fraud under section 6663            
          for 1989 and 1990; and (4) whether petitioner AJF is liable for             
          additions to tax imposed by section 6651(a) for failing to file             
          timely 1988, 1989, and 1990 income tax returns.                             
                                  FINDINGS OF FACT                                    
          Background of Petitioners                                                   
               Anthony J. Ferrentino (Ferrentino) was the president and               
          sole shareholder of AJF during the years at issue.  Ferrentino              
          resided in Williamsville, New York, at the time the petitions               
          were filed.  Ferrentino married Carol Ferrentino on December 30,            





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