- 28 - JJH’s return were accurate. This double counting of income was of no consequence to petitioner since he managed to manipulate the numbers on all returns to the point where there was little to no taxable income. Petitioner intentionally mischaracterized items of income on his 1994 return. He reported total income of $31,500, comprising $1,000 Schedule C income, $10,000 rent income, $3,000 capital gain income and $17,500 as income from a covenant not to compete. At trial, he admitted these categories were all concocted, stating: “I don't mind giving you [IRS] the elbow, but I'm not going to lie to him [the Court]”. Petitioner mischaracterized his income to avoid self-employment tax and to deter the Service from discovering unreported income related to JJH. Petitioner’s lack of candor was prevalent throughout the discovery process and trial.12 Petitioner filed a separate return to avoid payment of taxes on the unreported income in the event he got caught.13 12By interrogatory, respondent asked why JJH paid the University of Central Florida, and petitioner stated the payments were for “equipment rental”. When questioned on cross- examination about why JJH paid petitioner’s personal living expenses, petitioner stated: “I've got to live somewhere". 13Charlene did not file and testified that she bought her husband out of JJH and took his name off everything including the CCA signature card because of the IRS collection activity. In avoiding the joint and several liability of a joint return, petitioner hoped to remain free to transfer assets and income to Charlene to frustrate the Service’s collection activities.Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: May 25, 2011