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15, 1990.
In March 1995, Strong filed his individual Federal income
tax returns for the years 1990, 1991, 1992, and 1993 with the
Internal Revenue Service. He filed his individual Federal income
tax return for 1994 on April 15, 1995. For each of those years,
Strong’s income tax returns reported taxable income of zero, or a
loss. SCC did not file income tax returns for any of the years
at issue.
Respondent determined that Strong understated his income
from the construction business during the years in issue, and,
further, that he had overstated deductible expenses.
Additionally, during the examination of Strong’s income tax
returns, respondent examined a bank account, No. 893315300, at
First Bank of Coon Rapids, later named Marquette Bank Coon
Rapids. Both Strong and SCC are identified as account holders on
that account. Respondent identified numerous deposits to that
account made in cash from unidentified sources. Respondent
determined that home sales reported on Strong’s returns were the
source of certain of these cash deposits. Respondent determined
that the remaining deposits to the account came from an
unidentified source and constituted unreported income of Strong
and SCC.
Respondent issued a notice of deficiency to Strong dated
October 18, 2000. On November 14, 2000, respondent issued a
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