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report in his 1983 return the additional $57,547 that he received
from ABC during that year. Mr. Drummond did not report in his
1983 return one-half of the community property wage income
totaling $27,115.37 that Betty Drummond, his spouse during 1983,
received during that year. Mr. Drummond reported cost of sales
in the amount of $21,890 in Schedule C of his 1983 return even
though he did not incur or pay any sales costs during 1983. The
amount of cost of sales claimed by Mr. Drummond in Schedule C of
his 1983 return is equal to the amount of precious metals that
Betty Drummond was awarded pursuant to the property settlement
agreement incident to her divorce from Mr. Drummond. Mr.
Drummond also deducted interest expenses in the amount of $6,669
in Schedule C of his 1983 return, even though he did not incur or
pay any interest expenses in his accounting business.
Mr. Drummond reported no income in his 1984 return. He thus
excluded from that return $119,874 that he had received during
1984 from ABC. Mr. Drummond also did not report in his 1984
return 50 percent of the interest income earned on the joint
Merrill Lynch account that he and Ms. Drummond had during 1984.
Nor did Mr. Drummond report in his return for 1984 the interest
income totaling $241 that he had received during that year from
the Bank of San Diego.
During respondent's investigation of Mr. Drummond's taxable
years 1983 and 1984, Mr. Drummond made numerous false, mislead-
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