- 4 -
1996 1997 1998 1999
Wages $16,665.00 $66,697.00 $60,904.00 $35,398
Nonemployee income 22,274.10 6,830.47 15,468.88 --
Dividends 253.00 1.00 2.00 --
“Funder” fee 2,931.00 -- -- --
Rents -- -- 2,400.00 --
S corp. income -- -- 16,867.00 10,349
Petitioner received multiple Forms W-2, Wage and Tax Statement,
and Forms 1099 from various payers for the years in issue.
Petitioner failed to maintain, or to submit to the Internal
Revenue Service (IRS) for examination, complete and adequate
books and accounts of his income-producing activities for each of
the years in issue as required by the applicable provisions of
the Internal Revenue Code and the regulations promulgated
thereunder. When the IRS requested the records and thereafter
issued a summons for them, petitioner sent letters containing
frivolous tax-avoidance arguments and filed a motion in a Florida
State court to quash the summons.
In the absence of adequate records, the IRS computed
petitioner’s taxable income for the years in issue by reference
to bank deposits, information returns, and information obtained
from third-party contacts.
Petitioner was the 100-percent shareholder of Colonial
Mortgage Corp. for 1998 and 1999. Colonial Mortgage Corp. was
formed on November 18, 1998, and made an S election on
February 1, 1999, effective November 18, 1998. Colonial Mortgage
Corp. filed corporate income tax returns and the related
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