AJF Transportation Consultants, Inc., et al. - Page 1

                                 T.C. Memo. 1999-16                                   

                               UNITED STATES TAX COURT                                

             AJF TRANSPORTATION CONSULTANTS, INC., ET AL.,1 Petitioners               
                   v. COMMISSIONER OF INTERNAL REVENUE, Respondent                    

               Docket Nos.  12590-95, 24190-96,   Filed January 28, 1999.             
                         24482-96, 24483-96.                                          

                    J is a corporation engaged in furniture delivery                  
               services.  F is J's sole shareholder and president.  J's               
               client issued checks to J for its delivery services and for            
               fuel costs.  F cashed the checks personally and diverted the           
               funds for his own personal benefit.  None of the diverted              
               funds were reported as income on F's individual tax returns            
               or on J's corporate tax returns for the 1988, 1989, and 1990           
               taxable years.  J did not timely file its corporate tax                
               returns for the years at issue.  R determined that the full            
               amount of the diverted funds was taxable to both J and F.              
               R's deficiency notices were issued more than 3 years after J           
               and F's income tax returns were filed.                                 

               1Cases of the following petitioners are consolidated                   
          herewith: AJF Transportation Consultants, Inc., docket No. 24190-           
          96; Anthony J. Ferrentino, docket No. 24482-96; and Anthony J.              
          Ferrentino and Carol L. Ferrentino, docket No. 24483-96.                    

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