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Petitioner filed his 1986 and 1987 income tax returns on
March 10, 1989, 1988 return on October 20, 1989, and 1989 return
sometime after August 15, 1990. On September 30, 1997,
respondent determined deficiencies relating to 1986 through 1989;
additions to tax for fraud, pursuant to section 6653(b)1,
relating to 1986, 1987, and 1988; and a fraud penalty, pursuant
to section 6663, relating to 1989.
From 1984 through 1990, petitioner worked for Stuart-James
Company, Inc. (Stuart-James) in Tampa, Florida. Petitioner
started as an assistant manager, was then promoted to manager,
and from 1985 through 1990 was regional vice president
responsible for 14 branch offices and approximately 300 sales
representatives. Because of his significant management
responsibilities and demanding travel schedule, petitioner relied
heavily on staff to manage his affairs. In the late 1980s, he
hired Francis Pisano, a certified public accountant and tax
attorney, and Kristine Grace DeFillippis, a secretary.
Petitioner agreed to pay 3 percent of his income to Mr. Pisano.
In exchange, Mr. Pisano was responsible for managing petitioner’s
business and personal financial matters and preparing
petitioner’s 1986 through 1989 returns. Ms. DeFillippis managed
petitioner’s administrative (e.g., reimbursement of petitioner’s
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue.
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