- 2 - both Chens pleaded guilty to a variety of crimes. Neither PCTI nor the Chens reported the proceeds of the fraud as income. The Chens contest the resulting deficiency and fraud penalty. Mrs. Chen seeks innocent spouse relief. Background The Chens came to the United States in 1985 from Taiwan, where Mr. Chen had graduated from college and earned master’s degrees in civil engineering and architecture. He had taught high school for 20 years in Taiwan, but after immigrating he switched fields and worked for his brother’s computer business. In 1991, he started up his own firm and began wholesaling computer parts under the name PC Team. Within two years, he incorporated that business as PCTI. He was PCTI’s sole shareholder and its president, and he named Mrs. Chen vice president and administrator. She worked at PCTI full time, managing the company’s inventory and running the business when Mr. Chen was away. She had full authority to sign checks and tax returns on behalf of PCTI, though the parties stipulated that she does not read, write, or speak English. PCTI made a valid S corporation election in 1995 and was still an S corporation in 1998, the tax year at issue. Its accounting system was not complex--Mr. Chen simply dictated the company’s financial transactions to Bo Hua He, PCTI’s in-house accountant. Ms. He also prepared many of the checks for thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011