Timothy Dean Strong - Page 5

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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           
               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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