- 3 - In 1994, Theron pleaded guilty to income tax evasion pursuant to section 7201 for taxable year 1990 and to a 1993 offense for distribution of cocaine base. As part of the criminal proceeding, respondent reconstructed Theron’s income for taxable years 1989, 1990, and 1991 using a net worth analysis. In the plea agreement, Theron admitted, consistent with respondent’s net worth analysis, that in 1990 he had additional unreported income of $63,610. After Theron’s plea agreement, respondent conducted a civil examination of Theron’s 1989 Federal income tax return and petitioner’s and Theron’s 1990 joint Federal income tax return. As part of this examination, respondent’s revenue agent requested petitioner and Theron, who was then in prison, each to provide documentation such as income records and expense records. Neither petitioner nor Theron complied with the request. Relying upon the income reconstructions prepared in the criminal investigation, with certain modifications, respondent determined a $3,424 deficiency in Theron’s 1989 Federal income tax liability and a $24,676 deficiency in petitioner’s and Theron’s 1990 joint Federal income tax liability. For taxable year 1990, respondent also determined that Theron was liable for an $18,507 addition to tax for fraud. On April 15, 1997, respondent issued a notice of deficiency reflecting these determinations.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011