Joseph J. House - Page 2




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               also transferred funds from this account to the                        
               accounts of C-Co. and X-Co. to allow other family                      
               members to use the funds for personal purposes.  P                     
               reported all receipts from his accounting services on                  
               J-Co.’s return, then deducted all business and personal                
               items therefrom, disguising most of the items as “cost                 
               of goods sold”.  J-Co. paid no tax.  P did not report                  
               any income from J-Co. on his return for 1994, nor did                  
               he report income from the payment of personal expenses.                
               Held:  J-Co. is a sham, and we disregard it for tax                    
               purposes.  Petitioner’s gross receipts, less allowable                 
               business expenses, are includable in his income.  Held,                
               further:  P is liable for the fraud penalty under sec.                 
               6663, I.R.C.                                                           


               Joseph J. House, pro se.                                               
               John J. Comeau, for respondent.                                        


                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

               LARO, Judge:  These cases are before the Court consolidated            
          for purposes of trial, briefing, and opinion.  Joseph J. House              
          (petitioner) and Joseph J. House, Inc. (JJH) separately                     
          petitioned the Court to redetermine respondent’s determinations             
          of the following deficiencies in Federal income tax, addition to            
          tax, and accuracy-related penalties:                                        
               Joseph J. House, docket No. 8664-98                                    
                                                  Accuracy-related penalty            
               Year                Deficiency          Sec. 6662(a)                   
               1994                $32,921             $6,584                         









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