Stephen Martin Beddow - Page 2

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          illegal drugs.  The resulting deficiencies in income tax and                
          additions to tax are as follows:                                            
                                        Additions to Tax                              
          Year      Deficiency     6653(b)(1)(A) 6653(b)(1)(B) 6654                   
          1986      $5,511         $4,133         *              $267                 
          1987      4,198          3,149               *         227                  
               *Fifty percent of the interest due on the deficiency.                  
               We decide the following issues:                                        
               1.  Whether petitioner's case should be dismissed in part              
          for failure to prosecute properly.  We hold it should.                      
               2.  Whether petitioner is liable for the addition to tax for           
          fraud under section 6653(b)(1)(A) and (B) for 1986 and 1987.  We            
          hold he is.                                                                 
               Unless otherwise stated, section references are to the                 
          applicable versions of the Internal Revenue Code, and Rule                  
          references are to the Tax Court Rules of Practice and Procedure.            
               Petitioner resided in Milan, Michigan, when he filed his               
          petition.1  Petitioner operated a restaurant during 1986 but shut           
          down operations by 1987.  During 1986 and 1987, petitioner                  
          engaged in several illegal drug transactions involving the                  
          purchase and sale of cocaine.  Petitioner conducted the illegal             

               1Petitioner was incarcerated in a Federal correctional                 
          institution when he filed his petition but was released at the              
          time this case was set for trial.                                           

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