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During each of the years in issue, petitioner received gross
receipts and incurred expenses with respect to his aviation
activities.
Petitioner’s Tax Returns
For the years in issue, petitioner personally prepared his
Federal income tax returns. He reported no gross income or
expenses from his aviation activities. On Schedule C, Profit or
Loss From Business, he reported gross receipts and net profit
from “Bookkeeping and Accounting” as follows:
Year Gross Receipts Net Profit
1989 $116,869 $23,177
1990 165,116 25,122
1991 13,200 13,200
The Criminal Investigation
In the early 1990's, petitioner became the subject of an
investigation by the Internal Revenue Service Criminal
Investigation Division (CID). On several occasions in 1992, as
part of that investigation, undercover CID agents posing as new
clients of Romer & Co. met with petitioner and surreptitiously
recorded their conversations. The criminal investigation
culminated in the April 15, 1996, indictment of petitioner on
three counts of violating section 7206(1) with respect to his
individual Federal income tax returns for taxable years 1989,
1990, and 1991, for willfully making and subscribing false tax
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