- 42 - 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”.Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Next
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