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the false invoice scheme in 1986. Petitioner did not report on
his 1985 or 1986 Federal income tax return any of the amounts
that he received from the false invoice scheme.
During 1984, the Zachova entities began looking into
contracting with Ford Motor Co. (Ford) to do work for it.
Petitioner and Sova met with a Ford employee named Ed Cooper
(Cooper), and Cooper told petitioner and Sova that they would
secretly have to pay him money (bribes) for Ford to award
contracts to the Zachova entities. Petitioner and Sova discussed
Cooper's demand, and petitioner and Sova decided to pay Cooper on
behalf of the Zachova entities for an award of Ford contracts.
Petitioner and Sova each paid Cooper a total of $90,286 during
1985 and 1986, and, in return, Ford awarded some of its contracts
to the Zachova entities. Petitioner and Sova used some of the
money that they received from the false invoice scheme to pay
Cooper the bribes.
OPINION
Respondent determined and argues that petitioner failed to
report for the respective years in issue income of $217,162 and
$94,439 realized from the false invoice scheme. Respondent
asserts that petitioner exerted dominion and control over all the
funds he received from that scheme and that he was free to use
those funds as he chose. Petitioner does not dispute the fact
that he received the amounts determined by respondent to be
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