Petzoldt v. Commissioner
United States Tax Court
In May 1984, P was arrested for speeding in Florida. The arresting officer found $ 610,712.42 in cash in the automobile P was driving, as well as some marijuana, two controlled substances, drug paraphernalia, and P's passport. P claimed ownership of the cash.
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In May 1984, P was arrested for speeding in Florida. The arresting officer found $ 610,712.42 in cash in the automobile P was driving, as well as some marijuana, two controlled substances, drug paraphernalia, and P's passport. P claimed ownership of the cash. P further, through certain "drug ledgers," was linked with drug purchases totaling $ 3,053,430 made in 1983 and 1984. Using the cash-expenditures method of income reconstruction, R determined that P had unreported income from drug trafficking for 1983 in the amount of the drug purchases, and for 1984 in the amount of the drug purchases,…
1Opinion of the Court
HAMBLEN, Judge:
Respondent determined deficiencies and additions to tax in petitioner’s Federal income taxes as follows:
Additions to tax
Sec. Sec. Sec.
Year Deficiency 6653(b)(1) 1 6653(b)(2) 6654
1983 $861,136 $430,568 * $52,737
1984 963,717 481,859 ** 60,589
The issues for determination are:
1. Whether petitioner had unreported income for the years in issue in the amount determined by respondent.
2. Whether petitioner is liable for the addition to tax under section 6653(b) for fraud.
3. Whether petitioner is hable for the failure to pay addition to tax under section 6654(a) for failure to pay…
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