George Maciel - Page 9

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          1992 returns.9  Petitioner’s accountants were not aware of Newark           
          T&B until after the Internal Revenue Service (IRS) commenced its            
          audit and investigation.  Alviso/GMT’s bookkeeper was also                  
          unaware of the Newark T&B business operations.                              
          E.  Petitioner’s Racing Business                                            
               During the years at issue, petitioner maintained an                    
          unincorporated automobile racing business under the name “Alviso            
          Rock/HK Racing”.10  Petitioner was the sole owner of this                   
          business.  During the years at issue, petitioner maintained a               
          bank account at the Bank of Milpitas, account No. 512-001-102605,           
          in the name “Alviso Rock/HK Racing”.  During the years indicated,           
          petitioner received the following amounts of racing income, which           
          he deposited into the aforementioned bank account:                          
               Description         1990           1991              1992              
                                                                                     
               Deposits            $16,811.57     $14,397        $31,493.96           
               Less: nontaxables1  (4,125.34)      (4,334)       (20,144.00)          
               Net racing income   12,686.23      10,063         11,349.96            
               1 The parties stipulated the above nontaxable deposits.                
          The funds were received from, inter alia, sponsors11 and/or                 
          winnings.                                                                   

               9Petitioner argues that unclaimed expense deductions and               
          advances/loans substantially offset income that Newark T&B                  
          earned.                                                                     
               10Initially, petitioner characterized this endeavor as an              
          “operation”, but he admitted at trial that this “operation” was a           
          business.                                                                   
               11Petitioner’s related businesses, Alviso, GMT, and BAMA,              
          were among the sponsors.                                                    





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