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(1) Pattern of Unreporting Substantial
Amount of Income ....................... 64
(2) Lack of Records .......................... 65
(3) Filing History ........................... 67
(4) Dealings in Cash ......................... 68
(5) Concealing Transactions .................. 69
(6) Failure To Cooperate with Respondent ..... 70
(7) Credibility of Witnesses ................. 71
(8) Level of Education, Age, and State
of Health .............................. 72
(9) Summary Regarding Intent ................. 73
c. Conclusion Regarding Fraud and Statute of
Limitations ............................... 73
C. Amount of Understatement of Income .................. 74
1. Adjustments to BLS Figures ....................... 75
2. Adjustment for Specific Gift ..................... 79
3. Adjustment for Proceeds of Automobile
Transactions ................................... 80
4. Adjustment for Larry’s Audit Results ............. 81
5. Adjustment for Sylvia’s Gambling
Expenditures ................................... 83
6. Additional Items Identified as in Dispute ........ 84
a. Withholding on Gambling Winnings ........... 84
b. Birthing Costs for Nicole .................. 85
c. Estimated Tax Payments ..................... 85
d. Tax Payment ................................ 86
e. Wedding Ceremony for Sylvia................. 86
f. Detective Expenses ......................... 87
g. Janie’s Living Expenses .................... 88
h. Duplications Regarding Johnson Limousine ... 89
7. Other Adjustments ................................ 89
a. Rental Income .............................. 90
b. Duplication of Rental Expenses and
Mortgage Payments ....................... 90
c. Depreciation ............................... 91
d. Cash and Jewelry ........................... 91
8. Summary Relating to Amount of Understatement
of Income ..................................... 93
D. Capital Gain for 1989 ............................... 94
E. Taxable Social Security Benefits .................... 95
F. Self-Employment Taxes ............................... 97
G. Self-Employment Deduction ........................... 99
H. Married Couples Deduction ........................... 99
I. Additions to Tax and Penalties ..................... 100
1. Sections 6653(b) and 6663 ...................... 100
2. Section 6661 ................................... 102
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Last modified: May 25, 2011