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B. Prior Tax Court Case
Ferrarese embezzled money from his company from 1975 to
1983. He embezzled $392,468 in 1983. Petitioner learned about
the embezzlement when Ferrarese told her about it in January 1984
when he was fired from his job because his embezzlement was
discovered.
Petitioner agreed in April 1984 to let Ferrarese sign the
1983 return for her, and Ferrarese did so. Respondent determined
deficiencies in petitioner’s and Ferrarese’s income tax for 1981,
1982, and 1983 based on their failure to report the embezzlement
income.
Petitioner used the proceeds from the sale in 1985 of a
house owned jointly by her and Ferrarese in Massapequa, New York,
to buy a house in Merrick, New York. She owned the Merrick house
solely in her name. She sold the Merrick house and used the
proceeds to buy the Florida condominium that she owned at the
time of trial. Petitioner paid $52,000 in 1988 for the
condominium.
In Ferrarese v. Commissioner, T.C. Memo. 1993-404 (Ferrarese
I), affd. 43 F.3d 679 (11th Cir. 1994),1 we held that petitioner
was entitled to relief from joint liability under section 6013(e)
for 1981 and 1982. In that opinion, we concluded that she filed
1 The parties agreed to be bound by the findings of fact in
that case.
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Last modified: May 25, 2011