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section 6662(a).1 The deficiency and penalty stemmed from
respondent’s determination that petitioners’ gross income for
1999 included $400,275 of unreported gross receipts received by
K & C International Co. (KC), the sole proprietorship of
petitioner Kaing Chin Baek (Baek). Respondent determined the
presence and amount of this unreported income from information
that he received from third parties stating that Baek had on each
of various days made deposits totaling at least $10,000 into KC’s
business checking account (KC account).
During this proceeding, respondent obtained the 1999 bank
statements of the KC account, spoke to Baek (or his counsel), and
conceded at the start of trial that none of the proceeds of the
referenced deposits were includable in petitioners’ gross income
as they were received by Baek in repayment of funds given to
Byung Chen Yoo (Yoo). Respondent now notes that the cash
deposited into the KC account during 1999 ($898,286.80) exceeds
the amount drawn on checks payable from that account to Yoo or to
one of his businesses ($771,640) by $126,646.80 and argues that
the $126,646.80 is taxable to petitioners unless they prove to
the contrary. Respondent conceded at the start of trial that
petitioners’ unreported income for 1999 is no greater than
$126,646.80 and that the deficiency and accuracy-related penalty
1 Section references are to the applicable versions of the
Internal Revenue Code.
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Last modified: May 25, 2011