Darrell L. Gaines - Page 11

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               The examination of petitioner’s returns for the years in               
          issue began in 1996.1  Petitioner failed to report interest                 
          income, rental income, dividend income, and capital gains on his            
          original returns.  On May 7, 1997, petitioner filed Forms 1040X,            
          Amended U.S. Individual Income Tax Return, for 1993, 1994, and              
          1995.  On the amended returns, petitioner reported additional               
          income as follows:                                                          
                                    1993      1994      1995                          
          Interest income           $869      $133      $449                          
          Sch. E net income          199     2,137       677                          
          Dividend income            777     2,377     2,844                          
          Capital gain             1,547     1,518    22,898                          
          Sch. C net income        1,715       ---       ---                          
          Total                   $5,107    $6,165   $26,868                          
          On each amended return, petitioner indicated that he had                    
          “inadvertently omitted” these items of income.                              
               On an application to open an investment account in 1993,               
          petitioner indicated that his income for that year was between              
          $30,000 and $49,999.  On an application for a credit card that              
          petitioner applied for in 1995 he indicated that his monthly                
          gross income from Grand Video was $7,000.                                   
               Revenue Agent Keinle (Agent Keinle) conducted the                      
          examination of petitioner’s returns.  During the course of the              
          examination, petitioner provided her with business and personal             




               1 The provisions of sec. 7491 are not applicable to this               
          proceeding.                                                                 




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