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5. Concealing Assets
For the taxable years 1994 through 1996, petitioner took
affirmative steps to conceal his assets and income, forcing
respondent to serve summonses on banks and mortgage companies,
to use Bureau of Labor Statistics information, and to implement
a bank deposits analysis in order to discover bank accounts,
recreate petitioner’s income, and eventually determine
understatements of income.
For taxable years 1997 through 2000, petitioner continued to
conduct business in the name of DSG. By not correctly reporting
the income earned by DSG, a disregarded trust, either on DSG’s
own return or on petitioner’s Form 1040, and continuing to
operate under DSG, there is a strong inference that petitioner
did so with the intent to conceal his income.
6. Failing To Cooperate With Tax Authorities
Petitioner did not cooperate with Agent Riley’s attempts to
obtain tax returns or financial information for the years in
issue. On December 2, 2002, petitioner informed Agent Riley that
returns were being prepared, when, in fact, they were not. When
respondent issued a notice of deficiency on August 21, 2003,
petitioner had still not filed the relevant tax returns. He
appeared to have eventually submitted Forms 1040 only to obtain
deductions to decrease the deficiencies owed.
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