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Petitioner filed an income tax return for 1993; the $99,880
was not reported.
Notice of Deficiency
In the notice of deficiency, respondent determined that
petitioner had $99,880 of unreported income. Respondent also
determined that petitioner was liable for the section 6662(a)
accuracy-related penalty for 1993.
Discussion
Issue 1: Petitioner's Unreported Income
The primary issue, i.e., whether petitioner had $99,880 of
unreported income in 1993, is a question of fact. Petitioner
claims that the $99,880 did not belong to him and therefore is not
includable in his gross income. Respondent posits that because
petitioner had dominion and control over the forfeited funds and
could not prove that he held the funds merely as an agent or
conduit for Abel, the proceeds represent taxable income to him.
Gross income, as used in section 61(a), means the accrual of
some gain, profit, or benefit to the taxpayer, over which the
taxpayer exercises dominion and control. See James v. United
States, 366 U.S. 213, 219 (1961); Arcia v. Commissioner, T.C. Memo.
1998-178; Liddy v. Commissioner, T.C. Memo. 1985-107, affd. 808
F.2d 312 (4th Cir. 1986). In this regard, the Supreme Court
explained that a “gain ‘constitutes taxable income when its
recipient has such control over it that, as a practical matter, he
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