Reeves v. Commissioner
This text of 1977 T.C. Memo. 114 (Reeves v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
*329 Over a number of years, taxpayer, an accountant, secured funds from a client ostensibly to pay her taxes. The monies received were diverted to his own use.
MEMORANDUM FINDINGS OF FACT AND OPINION
BRUCE,
| Addition to Tax | ||
| Year | Deficiency | Sec. 6653(a) |
| 1968 | $2,938.13 | $146.91 |
| 1969 | 6,939.65 | 351.11 |
| 1970 | 4,724.16 | 236.21 |
| 1971 | 739.00 | 36.95 |
The issues for decision are (1) whether petitioner received taxable income during 1968 through 1971 which he failed to report*330 on his returns for those years, (2) whether petitioner is entitled to deductions for depreciation in excess of the amounts allowed by respondent for each year, (3) whether petitioner is entitled to net operating loss carryover deductions for 1968, 1969, and 1971, (4) whether petitioner is liable for additional self-employment taxes for 1968 through 1971, and (5) whether petitioner is liable for the additions to tax determined by respondent.
FINDINGS OF FACT
Some of the facts have been stipulated by the parties and they are so found.
Petitioner Richard A. Reeves, Jr., resided in Indianapolis, Indiana, during the taxable years in issue and at the time his petition was filed herein. Petitioner filed Federal income tax returns for 1968 and 1969, including amended returns for both years, with the district director of internal revenue at Indianapolis, Indiana. His returns for 1970 and 1971 were filed with the internal revenue service center located at Cincinnati, Ohio. Petitioner's filing status each year was that of a married individual filing a separate return.
Petitioner has been engaged in the accounting business since 1952, but is not, and never has been, a certified public*331 accountant in the state of Indiana, nor has he ever been licensed as a public accountant by the state of Indiana. In 1965 he was recommended to Jean Goettman, who had just started operating two motels in Anderson, Indiana, as someone who could take care of her tax work. Petitioner misrepresented himself to Mrs. Goettman as a certified public accountant and gained employment to handle all of her accounting and tax affairs. Included in petitioner's duties pursuant to such employment were preparation of Mrs. Goettman and her husband's Federal income tax returns and payment of various taxes owed by them. In 1968 petitioner secured a power of attorney from the Goettmans designating him as their representative in connection with their Federal tax liabilities.
During 1968 through 1971 petitioner received the following amounts of currency from Mrs. Goettman for the ostensible purpose of satisfying her tax liabilities:
| Year | Amount |
| 1968 | $21,147.00 |
| 1969 | 18,895.00 |
| 1970 | 22,955.00 |
| 1971 | 7,374.00 |
No Federal income tax returns were filed by or on behalf of the Goettmans for the taxable years 1966, 1967, 1968, 196 9, and 1971, and the return filed on their behalf for*332 1970 showed zero tax liability. Petitioner made no payments on behalf of the Goettmans for their Federal income tax liabilities for any of these years. 2
Respondent determined that, with certain exceptions, the money received by petitioner from Mrs. Goettman constituted unreported taxable income to him, and we agree. The amounts, as adjusted, are set forth below:
| Year | Amount |
| 1968 | $16,928.52 |
| 1969 | 16,728.12 |
| 1970 | 20,850.00 |