Franklin W. Briggs - Page 42




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                        Issue 6.  Additions to Tax for Fraud                          
         Background                                                                   
              As discussed supra, on their tax returns as originally filed            
         for each year in issue, petitioners omitted from gross income the            
         West Florida Gas rebate checks that had been issued in the                   
         individual names of either Briggs or Mr. Morris.  Briggs and Mr.             
         Morris were each convicted by the U.S. District Court for the                
         Northern District of Florida, pursuant to section 7207, for                  
         willfully filing false Federal income tax returns for taxable                
         years 1986, 1987, and 1988.                                                  
              In 1985, Briggs, Mr. Morris, Daniell, and Michael Gay                   
         incorporated Association Cable TV, Inc. (ACT), to provide cable              
         television services to a beach resort.  The four were equal                  
         shareholders.  In 1988, they sold ACT’s assets to Jones                      
         Spacelink, Ltd.  In connection with the sale, each of the four               
         shareholders received $199,490 in gross proceeds.  Of this                   
         amount, $82,600 represented proceeds from the sale of a covenant             
         not to compete.  Petitioners’ 1988 Federal income tax returns                
         each omitted $40,200 of this $82,600 amount from gross income and            
         also omitted $36,000 of other sale proceeds, erroneously                     
         characterizing them as “loan repayments”.  On brief, petitioners             
         agree to respondent’s adjustments increasing each of their                   
         taxable year 1988 gross incomes by these amounts, conceding that             
         their return positions were “unexplained and * * * erroneous”.               






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