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As discussed, supra, Vortex’s corporate tax return for the
year at issue was due June 15, 1994.14 Vortex concedes it did
not file a tax return for FYE 1993 until after it received the
notice of deficiency in August 1995. Vortex maintains that its
failure to file its FYE 1993 return by the extended due date was
not due to any attempt on its part to evade its taxes but rather
was due to other circumstances stemming from the investigation,
arrest, trial, and imprisonment of Mr. Zhadanov. Mr. Zhadanov
was arrested in May 1993. Incident to the arrest, law
enforcement agents searched the Vortex facility and the
Zhadanovs’ apartment and seized, among other things, many of
Vortex’s books and records. In January 1994, Mr. Zhadanov
pleaded guilty, and from 1994 to 1999 Mr. Zhadanov was
incarcerated.
By June 15, 1994, the deadline for filing Vortex’s FYE 1993
return, Mr. Zhadanov had already pleaded guilty pursuant to a
plea agreement that required him, among other things, to file
accurate Federal income tax returns on behalf of Vortex and for
himself. The terms of the plea agreement provided an extremely
strong incentive to file accurate tax returns because the failure
14Corporate fiscal year income tax returns are required to
be filed on the fifteenth day of the third month following the
close of the corporation’s fiscal year. Sec. 6072(b). Vortex’s
income tax return for FYE 1993 was originally due on Dec. 15,
1993, but the filing deadline was extended to June 15, 1994.
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