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On Ahmed’s individual Federal income tax returns for 1997
and 1998, and on the nominee entity corporate Federal income tax
returns for 1997 and 1998, Ahmed did not report, among other
things, the previously discussed cash sales proceeds of the
nominee entities that were not deposited into the nominee entity
bank accounts. At trial, Ahmed conceded that he had received
unreported cash sales of $321,517 for 1997 and $344,869 for 1998.
Respondent’s Audit
In October of 1997, respondent began an audit of K & M for
1995. Based on information set forth in informant letters and
information obtained in the audit of K & M for 1995, respondent’s
agent expanded the scope of the K & M audit to include 1996 and
Ahmed’s 1995 and 1996 Federal income tax returns. Respondent’s
agent also began reconstructing K & M’s and Ahmed’s income and
expenses for 1997 and 1998, as their respective Federal income
tax returns for 1997 and 1998 had not yet been filed with
respondent.
During the audits of K & M and of Ahmed, Ahmed was not
forthcoming in his communications with respondent’s agent. Ahmed
attempted to conceal assets from respondent’s agent, to impede
respondent’s examination, and in general Ahmed was uncooperative
and evasive.
Respondent’s agent sent various “Information Document
Request” forms (IDRs) to Ahmed in connection with the audit of
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