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notice of deficiency to SCC. Respondent determined that both
Strong and SCC were liable for Federal income taxes on unreported
income for the taxable years ended December 31, 1990 through
December 31, 1994.2
Strong and SCC filed timely petitions with this Court. At
the time the petitions were filed, Strong resided at Clear Lake,
Minnesota, and SCC’s place of business was New Hope, Minnesota.
Strong asserts that, before 1990, he had accumulated
approximately $165,000 in cash from the conduct of his
construction business, as well as from the sale of personal
assets and from savings made while he served with the United
States Navy. In his pleadings, he maintains that transactions
with this accumulated cash explain the unidentified deposits, as
well as other purchases and expenditures made during the years in
issue.
In an Amendment to Answer, respondent alleges that the
doctrine of judicial estoppel prevents Strong from arguing that
he had cash accumulations of $165,000 in 1990, in view of the
fact that Strong had asserted in a 1990 bankruptcy petition that
he had no such cash.
2 Petitioner maintains that the notice of deficiency to
Strong is consistent with Strong’s practice of reporting that he
operated the construction business directly. Respondent’s answer
offers the alternative position that, if SCC is a taxable entity,
then Strong should be charged with constructive dividends in the
amount of SCC’s net income.
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