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pay significant dividends to Bay Point, which petitioner used to
open a bank account in Bay Point’s name.
Petitioner appointed Mr. Ellis as the sole “trustee” of Bay
Point. Mr. Ellis was incarcerated for contempt approximately 1
month after petitioner purchased the Bay Point “trust” and Mr.
Ellis was indicted shortly afterwards. Petitioner was the only
person with control over the assets of Bay Point. Petitioner was
the only person with signature authority over Bay Point’s bank
account, and petitioner managed all of Bay Point’s property.
In 2002, Mr. Ellis was sentenced to serve 10 and a half
years in prison for marketing sham trusts. Petitioner
nonetheless continued to use Bay Point. Bay Point has never
filed an income tax return and has never paid any taxes.
Petitioner repeatedly told IRS agents that he had no taxable
income or gross income and was not required to file income tax
returns for his 1999 through 2002 taxable years. Throughout the
examination of petitioner’s 1999 through 2002 taxable years,
petitioner sent multiple documents to the IRS containing
frivolous arguments.
On August 14, 2003, the IRS’s revenue agent informed
petitioner of the IRS’s authority to enforce income tax laws and
examine books and records, provided petitioner with a document
titled “The Truth about Frivolous Tax Arguments,” and provided
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Last modified: May 25, 2011