Frank and Virginia Muhich - Page 11

                                       - 11 -                                         

          transactions with the other trusts and Midwest.7  Throughout the            
          1995 year, petitioner moved funds among and between the Asset               
          Trust, the Charitable Trust, and the Equity Trust in a circular             
          fashion.  Petitioner labeled the movements of funds "loans" or              
          "loan repayments".                                                          
               For tax purposes, the Charitable Trust filed 1994 and 1995             
          returns claiming it was a nonexempt charitable trust under                  
          section 4947(a)(1), and it paid no tax for either year.                     
               The Equity Trust, the Business Trust, and the Vehicle Trust            
          were dormant in 1994 and 1995, and each filed 1994 and 1995                 
          income tax returns showing no taxable income.                               
               All of the above-described trust tax returns for 1994 were             
          prepared by Savino.  The Martins were not aware of petitioners'             
          participation in the trust scheme until late 1994 when they                 
          prepared Midwest's tax return for that fiscal year.  The Martins            
          discovered that Midwest purportedly paid no wages to petitioner,            

               7 One such series of transactions occurred on June 21, 1995,           
          when petitioner caused Midwest to pay the Asset Trust $14,247.              
          On that same day, all of the following occurred: (1) The Asset              
          trust paid $14,247 by check to the Charitable Trust; (2) the                
          Charitable Trust paid $14,247 by check to the Equity Trust; and             
          (3) the Equity Trust paid the $14,247 by check back to the Asset            
          Trust.  Also on June 21, 1995, petitioner repeated three more               
          times this exact same series of movements of funds in a circular            
          fashion in the exact same amount, $14,247.  Petitioner labeled              
          all of these advances "loans".  Finally, petitioner caused the              
          Asset Trust to pay back the $14,247 to Midwest by check dated               
          June 21, 1995.                                                              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011