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return. After refusing several times to meet with Townsend,
petitioner reluctantly appeared for a meeting wherein he provided
no documents.
Respondent’s Determination
Respondent determined petitioner had unreported income in
1994 of $81,879, computed as follows:
Deposits to JJH’s account $176,547
Less: Transfers from CCA (9,400)
Less: Transfers from Coastal (22,335)
Total gross receipts 144,812
Less: Business expenses (31,433)
Taxable income 113,379
Less: Reported income (31,500)
Unreported Income 181,879
1This figure is respondent’s revised determination set forth
on brief and is less than the amount he set forth by amendment to
answer.
Respondent determined that JJH is a sham and should be
disregarded for tax purposes, or, alternatively, that petitioner
improperly assigned his income to JJH.
OPINION
Economic Reality of JJH
Petitioner was a knowledgeable former Internal Revenue
Service agent who devised a deceitful plan to divert and disguise
his income and used his insight and skill in an attempt to avoid
detection.
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