TAX COURT OPINION

Case: Lawrence E. Crovo
Docket Number: 11594-03
Judge: Goeke
Opinion Type: bench
Filed: 12/03/2012
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 LAWRENCE E. CROVO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ). ) ) ) ) Docket No. 11594-03. ) ) ) ) ORDE R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk ofthe Court shall transmit herewith to petitioner and to respondent a copy ofthe pages ofthe transcript ofthe trial in the above case before Judge Joseph Robert Goeke at New Orleans, Louisiana, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155, Tax Court Rules of Practice and Procedure. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. December 3, 2012 SERVED DEC -7 2012 Capital Reporting Company Lawrence E. Crovo 10-24-2012 3 1 2 3 4 BENCH OPINION BY JUDGE JOSEPH ROBERT GOEKE OCTOBER 24, 2012 LAWRENCE E. CROVO V. COMMISSIONER DOCKET NO.:11594-03 THE COURT: The Court has decided to render 5 oral findings of Fact and Opinion in this case, and 6 the following represents the Court's oral findings of 7 Fact and Opinion. The Oral Findings of Fact and 8 Opinion shall not be relied upon as precedent in any 9 other case. 10 11 12 This bench opinion is rendered pursuant to Internal Revenue Code section 7459 and Rule 152 of the Tax Court Rules of Practice and Procedure. 13 Hereinafter, section references will be to the 14 15 Internal Revenue Code as it applies to the issues in this case, and rule references will be to the Tax 16 Court Rules of Practice and Procedure. This is a 17 deficiency case and the Court has jurisdiction 18 pursuant to section 6213(a). 19 20 Respondent issued a notice of deficiency to the petitioner for the years 1980 through 1983. In 21 this notice of deficiency respondent determined 22 deficiencies in income tax in the amount of $96,835, 23 $374,861, $106,016, and $167,584, for the years 1980 24 through 1983 respectively. Respondent also 25 determined additions to tax for fraud pursuant to (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Lawrence E. Crovo 10-24-2012 4 1 2 3 section 6653 (b) for 1980 and 1981 in the amounts of $48,418 and $187,431. And pursuant to section 6653(b) (1) in the amounts of $53,008 and $83,792. 4 Respondent also determined the addition to tax 5 pursuant to section 6654 (a) in the amounts of $6,161, 6 7 8 9 $28, 723, $12,.902, and $10, 257 for the years 1983 through 1983 respectively. Respondent has made some concessions relative to the underlying deficiency amounts in 10 respondent's pretrial memorandum, and the petitioner 11 did not contest the additions to tax for fraud for 12 13 14 the years 1981 and 1982 in the petition which was filed in this case. The petitioner bears the burden of proof as 15 to the deficiencies in income tax under Rule 142 as 16 section 7491 is not applicable in this case. 17 Respondent has the burden of proof regarding the 18 fraud penalties asserted for each of the years and 19 the burden to come forward with evidence regarding 20 21 the addition to tax under section 6654 (a). Counsel for the petitioner timely filed a 22 petition in this case. However, after several years, 23 when both parties sought repeated continuances the 24 petitioner discontinued communication with his 25 counsel, who moved to be withdrawn as counsel as a (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Lawrence E. Crovo 10-24-2012 5 1 2 3 result of the failure to be able to communicate with the petitioner. The motion by petitioner's former counsel was granted and petitioner was advised in an 4 order that he needed to pursue this case pro se. 5 Petitioner also failed to provide a current address 6 7 8 to his former counsel, and respondent's counsel was unable to locate the petitioner except through a phone number provided by his former counsel. These 9 efforts by respondent's counsel to communicate with 10 11 the petitioner were only partially successful, and the petitioner failed to follow up on repeated 12 efforts by respondent's counsel to discuss this case. 13 Petitioner has not provided an updated address or 14 15 telephone number to the Court, and petitioner failed to appear when this case was called for trial on 16 October 22nd and 23rd, 2012. Accordingly, we deem 17 the petitioner to have defaulted as to the issues for 18 which he bears the burden of proof. 19 Respondent did introduce evidence at trial 20 in the form of exhibits and testimony to support the 21 determination that the petitioner was subject to the 22 23 fraud addition to tax for the years 1980 through 1983, and also to establish evidence sufficient to 24 shift the burden of proof to the petitioner relative 25 to the addition to tax under section 6654 (a). (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Lawrence E. Crovo 10-24-2012 6 1 The basic facts of the case are that the 2 petitioner failed to file federal income tax returns 3 for the years 1980 through 1983, and that the 4 petitioner failed to maintain complete and accurate 5 records for those tax years. Respondent audited the 6 petitioner for the years 1980 through 1983 and 7 8 9 10 11 12 13 analyzed petitioner's bank accounts for those years. Petitioner was a one-third owner of a corporation named Centerville beginning in February 1981, and then became a 50 percent owner of that corporation thereafter. Petitioner admitted, in response to a criminal indictment for the years 1980 and 1981, that he was engaged in a conspiracy to 14 evade taxes involving the corporation and other 15 activities. In the plea agreement entered in the 16 criminal case, petitioner acknowledged that he 17 diverted corporate funds, gave false information to 18 Internal Revenue Service, and also that he committed 19 acts of fraud relative to the year 1983 regarding a 20 house which was built by him and was sold in 1983 for 21 a large capital gain. Petitioner's admissions 22 relative to the years 1981 and 1982 relate to the 23 same activities which respondent alleges and provided 24 25 evidence for regarding 1980. Regarding 1983, petitioner's admissions and (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Lawrence E. Crovo 10-24-2012 1 the evidence produced at trial, I establish that 2 petitioner failed to report a large capital gain and 7 3 also took steps to shield the capital gain from 4 respondent's notice by having the sale of the 5 property be conducted in the name of his spouse. 6 This capital gain involved the sale of property on 7 8 9 Ice Valley Road in Massachusetts. Based upon the evidence produced by respondent and petitioner's admissions in the plea 10 agreement, we find that petitioner is liable for the 11 additions to tax for fraud for all four of the years 12 in question. And with the exception of the 13 concessions made by respondent, we uphold the 14 deficiencies in income tax for the four years in 15 question. 16 17 Regarding the addition to tax under section 6654 we find that respondent has sustained the burden 18 of going forward with evidence and that petitioner, 19 having failed to produce any evidence, is liable for 20 that addition to tax as well. This concludes the 21 Court's Oral Findings of Fact and Opinion in this case . 22 23 24 25 (Whereupon, at 8:50 a.m., the bench opinion in above-entitled matter was concluded.) (866) 448 - DEPO www.CapitalReportingCompany.com 2012