James J. Coyle - Page 16

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          the cash from sales of wheels and axles went directly into his              
          pocket.  As Mr. Coyle explained at trial:  “a lot of times it               
          would come to me.  Okay?  And I would use it for my income, you             
               Mr. Coyle failed to provide any evidence with respect to               
          respondent’s determination for 1993 that he received $2,500 from            
          Mr. Pearce from sales of wheels and axles.                                  
               Respondent elicited testimony from Mr. Herman concerning the           
          nature of Mr. Coyle’s income.  Mr. Herman presumed Mr. Coyle                
          received commission income from Regal, but the documentation did            
          not support this.  Mr. Herman explained that he “instructed Mr.             
          Coyle that, being an officer of the company, the IRS generally              
          required them to take wages, W-2s, and we could report the income           
          from the W-2s and any withholding.  During the course of those              
          years, that was not done.  He did not pay himself any payroll.”             
               Respondent’s revenue agent said that, at the audit, it was             
          first explained to her that Regal paid Mr. Coyle commissions.               
          Petitioners later “elaborated a little more, saying that it                 
          actually was wheel and axle income that came from the corporation           
          that went directly to Mr. Coyle in lieu of commission income.”              
          Mr. Coyle testified that he never received commission income.  We           
          find Mr. Coyle’s lack of clarity in reporting the nature of his             
          income to be disingenuous, given that he controlled Regal.                  

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