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CONTENTS
FINDINGS OF FACT ............................................ 8
I. Facts Relating to Issues Involving Deficiencies ......... 8
A. Background .......................................... 8
B. Tax Returns ......................................... 10
1. Frank and Katherine’s Returns ................... 10
2. Larry’s Returns ................................. 13
3. Ronnie’s Returns ................................ 15
4. Sylvia’s Returns ................................ 16
C. IRS Audits and Notices of Deficiency ................ 18
1. Frank and Katherine’s Audit and Notices of
Deficiency .................................... 18
2. Larry’s Audit and Notice of Deficiency .......... 20
3. Ronnie’s Audit and Notice of Deficiency ......... 22
4. Sylvia’s Audit and Notice of Deficiency ......... 22
D. Source and Application of Funds Analyses ............ 23
E. Cash Hoard .......................................... 28
F. Other Facts ......................................... 33
G. Capital Gain for 1989 ............................... 37
II. Facts Relating to Issues Involving Transferee
Liability ............................................ 38
A. Larry ............................................... 38
B. Ronnie .............................................. 39
C. Sylvia .............................................. 41
D. Specific Transfers .................................. 42
1. U.S. Savings Bonds .............................. 42
2. Account At Glendale Federal Savings and Loan .... 42
3. Longwood Property ............................... 43
4. Port St. Lucie Property ......................... 43
5. Automobiles ..................................... 43
OPINION ..................................................... 44
I. Issues Relating to Deficiencies ......................... 44
A. Background .......................................... 44
B. Statute of Limitations and Fraud Issues ............. 45
1. In General ...................................... 45
2. Fraud ........................................... 46
a. Existence of an Underpayment ................ 47
(1) Likely Sources of Income ................ 50
(2) Nontaxable Source ....................... 53
(3) Summary Relating to Existence of an
Underpayment .......................... 61
b. Intent To Evade Taxes ........................ 63
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Last modified: May 25, 2011