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his Federal income tax return for 2002, petitioner did not
include any income from the corporation.
Petitioner and his spouse each filed Federal income tax
returns for 2002 as married filing separately. Respondent’s
records reflect that petitioner’s spouse reported on her return
$9,314, or one-half of the taxable income of the S corporation.
In the notice of deficiency, respondent determined a deficiency
against petitioner for the unreported $9,314 in flow-through
income from Lake Vista Billing Services, Inc.
Petitioner contends he never received any of the proceeds of
the corporation’s profitable activity for the year at issue. He
and his wife had serious problems between them during the year,
which he described at trial as follows:
This is my whole argument, Your Honor. During the second
week of January 2002, my wife proceeded to throw me out of
my home, which is where the business was located. She
changed the locks. She stripped our corporate bank
accounts, our personal bank accounts, charged up all the
cash she could on my credit cards to over $50,000, $60,000,
and she physically, lock, stock, and barrel, locked me out
of the corporation.
Although petitioner engaged the services of an attorney in
connection with his marital problems, no evidence was offered to
show what was resolved between petitioner and his wife regarding
the corporation. The notice of deficiency was ultimately issued
to petitioner in which a deficiency was determined based on the
inclusion in income of petitioner’s share of the S corporation’s
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