John Marretta - Page 1

                                 T.C. Memo. 2004-128                                  


                               UNITED STATES TAX COURT                                


                            JOHN MARRETTA, Petitioner v.                              
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 2289-03.               Filed May 27, 2004.                  


                    R determined that P was liable for penalties                      
               pursuant to sec. 6663, I.R.C., for the 1992, 1993, and                 
               1994 tax years.  During those years, P received                        
               distributions from a so-called Ponzi scheme.  P did not                
               report as income the amount of the distributions.  P                   
               pleaded guilty to violating sec. 7201, I.R.C., for his                 
               failure to declare the amount of the distributions he                  
               received from the scheme in 1994.  During P’s plea                     
               hearing, he admitted (1) that he failed to report as                   
               income the distributions he received from the scheme in                
               1992, 1993, and 1994, (2) that the distributions were                  
               taxable income, and (3) that, when he filed his 1992,                  
               1993, and 1994 Federal income tax returns without                      
               reporting the distributions as income, he acted                        
               voluntarily with the specific intent to violate a known                
               legal duty.                                                            
                    Held:  Because P pleaded guilty to an attempt to                  
               evade or defeat tax pursuant to sec. 7201, I.R.C., for                 
               1994, P is estopped from challenging R’s determination                 





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