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Petitioner hired different accountants to prepare PAC’s and
his personal income tax returns and provided them with only
limited financial information in aid of his efforts to avoid
detection of his unreported income.
On his Forms 1040, U.S. Individual Income Tax Return, for
1988, 1989, and 1990, petitioner reported wage income from PAC of
only $9,000, $9,000, and $10,000, respectively. For 1988, 1989,
and 1990, petitioner reported gross income of $62,655, $30,254,
and $62,457, respectively, and paid taxes of $7,750, zero, and
$14,720, respectively.
Despite showing only relatively modest amounts of income on
his tax returns, petitioner purchased during the years in issue
and the following year (1988, 1989 and 1991) four parcels of
improved real property for $1,925,000 and made total downpayments
of $755,037.57.2
In support of his applications for loans to finance these
purchases, petitioner made numerous representations concerning
his income that were inconsistent with the positions he took on
2In 1988, petitioner purchased property located at 3340 Ross
Road, Palo Alto, California 94303 for $395,000, paying
$152,226.35 down (of which $11,850 was paid from a PAC business
account) and property located at 3616 South Court, Palo Alto,
California 94306 for $310,000, with a downpayment of $74,832.83.
In 1989, petitioner purchased property located at 65 Park Avenue,
Atherton, California 94025 for $560,000, with a downpayment of
$147,255.15. In 1991, petitioner purchased property located at
3636 El Camino Real, Palo Alto, California, for $660,000, with a
downpayment of $380,723.84.
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