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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
know.”
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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