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ROBERT D. CHEYNE AND VIRGINIA CHEYNE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, RespondentCheyne v. CommissionerDocket No. 1257-76.
United States Tax Court T.C. Memo 1977-361; 1977 Tax Ct. Memo LEXIS 80; 36 T.C.M. 1439; T.C.M. (RIA) 770361;October 11, 1977, Filed E. J. Ball Kenneth R. Mourton ,J. Michael Adcock Thomas J. Miller, for the respondent.DAWSONMEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON,
Judge : Respondent determined the following deficiencies in petitioners' Federal income taxes and additions to tax:Addition to Tax Year Deficiency Sec. 6653(b) 1964 $ 941.18 $ 470.59 1965 1,150.25 575.13 1966 1,858.15 929.08 1967 2,365.71 1,182.86 1968 4,400.76 2,200.38 Concessions have been made by the parties. The issues presented for decision are:
1. Whether respondent is collaterally estopped from claiming that petitioner Robert D. Cheyne filed false and fraudulent Federal income tax returns for the years 1967 and 1968 because of petitioner's1977 Tax Ct. Memo LEXIS 80">*82 acquittal under
section 7206(1) for the same years.2. Whether any part of the underpayment of income tax for each of the years 1964 through 1968 was due to fraud with intent to evade tax on the part of petitioner Robert D. Cheyne.
3. Whether the assessment of any deficiencies for the years 1964 through 1968 is barred by the statute of limitations.
4. Whether petitioner Robert D. Cheyne is entitled to deduct certain business expenses not claimed on his Federal income tax returns for the years 1964 through 1968.
5. Whether petitioner Robert D. Cheyne received additional income of $600 for each of the years 1965 through 1968 from the use of an automobile provided by the J. D. Fisher Buick Company.
6. Whether petitioner Robert D. Cheyne received additional income from the use of motel accommodations for the years 1966, 1967, and 1968 in the amount of $350 for each year.
FINDINGS OF FACT
Some of the facts are stipulated. The stipulation of facts and supplemental stipulation of facts, together with the attached exhibits, are incorporated herein by this reference.
Robert D. Cheyne and Virginia Cheyne (petitioners) are husband and wife whose legal residence was1977 Tax Ct. Memo LEXIS 80">*83 Bentonville, Arkansas, at the time they filed their petition in this case. They filed their joint Federal income tax returns for the taxable years 1964 through 1968 with the Southwest Internal Revenue Service Center at Austin, Texas.
On their joint Federal income tax returns for the years in issue the petitioners stated gross income as follows:
Year Gross Income 1964 $ 10,748.89 1965 10,706.59 1966 10,621.98 1967 11,522.75 1968 13,153.91 On December 18, 1975, respondent mailed a statutory notice of deficiency to the petitioners covering the deficiencies and additions to tax for the years in issue.
During the years 1964 through 1968 Robert D. Cheyne (hereinafter referred to individually as the petitioner) was employed by the University of Arkansas as Sports Information Director. In that capacity he produced three radio shows designated Razorback Scoreboard Show, Razorback Report Show and Razorback Basketball Report Show. All shows were operated in connection with either the University of Arkansas football or basketball games. The production of the shows was primarily for the information of the sports fans of the University of Arkansas. They were1977 Tax Ct. Memo LEXIS 80">*84 not designed to produce substantial revenues, but were expected to cover the costs of production. Petitioner operated these shows on a cash basis because they were operated in connection with football or basketball games.
The Razorback Basketball Report Show was a taped pre-game 10-minute show which was taped for each of the University's 24 basketball games during each of the 1967-1968 and 1968-1969 basketball seasons. The 1967-1968 season ran from December 1967 through March 1968 and the 1968-1969 season ran from December 1968 through March 1969.
Some of the radio stations, because of conflicts with high school games, did not carry all of the 24 basketball games on their stations. The charge to each radio station was $5 per basketball game show.
The Razorback Scoreboard Show was a 15-minute live production of University of Arkansas football games broadcast at 4:45 every Saturday afternoon during the football season for each year 1964 through 1968.
The University of Arkansas played 10 football games per season and the charge for the Razorback Scoreboard Show was $5 per station per show.
The Razorback Report Show was a 15-minute taped show appearing three times per week1977 Tax Ct. Memo LEXIS 80">*85 during the football season on Mondays, Wednesdays, and Fridays, for 10 consecutive weeks consisting of analysis of past games and a preview of upcoming games. The Razorback Report Show was produced during the years 1964 through 1968 and the charge for the show was $4 per show or $12 per station per week.
Petitioner received payments by check for the production of these shows from radio stations throughout Arkansas and surrounding states. None of the amounts received from the radio stations by petitioner in producing the three radio shows were included in his Federal income tax returns for the taxable years 1964 through 1968. The amounts received from radio stations for the three shows were as follows:
Year Amount 1964 $ 500.00 1965 1,050.00 1966 1,250.00 1967 3,846.00 1968 6,357.00 The following is a schedule which reflects payment made to petitioner by check on the account of KMCW radio for the production of the Raxorback Report Show:
This amount was received by petitioner. The check was issued1977 Tax Ct. Memo LEXIS 80">*86 in payment of amount due the listed payee for broadcasting the Razorback Report Show over radio station KMCW. The University of Arkansas did not receive any of the amount paid.Date Payee Check No. Amount Endorsement 5-26-68 Razorback Report 173 $80.00 Razorback Report Show Show Bob Cheyne The following is a schedule which reflects payments made to petitioner by check on the account of White River Valley Broadcasters, Inc., for the production of the Razorback Scoreboard Show and Razorback Report Show over radio station KBTA:
1977 Tax Ct. Memo LEXIS 80">*87 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show and/or Razorback Report Show over radio station KBTA. The University of Arkansas did not receive any of the amounts paid.Date Payee Check No. Amount Endorsement 11-13-64 Football Scoreboard 10266 $50.00 Football Scoreboard Show Bob Cheyne 11-27-65 Razorback Score- 1218 50.00 Razorback Scoreboard board Show Bob Cheyne 11-23-66 Razorback Score- 2122 50.00 Razorback Scoreboard board Show Bob Cheyne 7-7-67 Razorback Score- 2687 50.00 Razorback Scoreboard board Show Show Bob Cheyne 10-6-67 Razorback Report 3146 24.00 Razorback Report Show Show Bob Cheyne 11-2-67 Razorback Report 3211 48.00 Razorback Report Show Show Bob Cheyne 11-30-67 Razorback Report 3257 48.00 Razorback Report Show Show Bob Cheyne 10-5-68 Razorback Report 3917 24.00 Razorback Report Show Show Bob Cheyne 11-7-68 Razorback Report 3988 56.00 Razorback Report Show Show Bob Cheyne 11-29-68 Razorback Score- 4030 50.00 Razorback Scoreboard board Show Show Bob Cheyne 11-29-68 Razorback Report 4031 40.00 Razorback Report Show Show Bob Cheyne The following is a schedule which reflects payments made to petitioner by check on the account of radio station KBRI for the production of the Razorback Scoreboard Show and/or Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and/or Razorback Scoreboard Show over radio station1977 Tax Ct. Memo LEXIS 80">*88 KBRI. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed by Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-10-65 Razorback Score- 958 $50.00 board Show 11-28-66 Razorback Score- 478 50.00 board Show 10-9-67 Razorback Report 713 24.00 Show 11-10-67 Razorback Report Illegible 48.00 Show 12-7-67 Razorback Report 764 48.00 Show 12-15-67 Razorback Score- 772 50.00 board Show 10-9-68 Razorback Report 1031 24.00 Show 12-9-68 Razorback Score- 1100 50.00 board Show 12-9-68 Razorback Report 1101 40.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KAMD radio for the production of the Razorback Scoreboard Show or Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KAMD. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-2-66 Razorback Score- 18426 $ 50.00 board Show 10-6-67 Razorback Report 19224 24.00 Show 11-3-67 Razorback Report 19280 48.00 Show 12-28-67 Razorback Score- 19411 50.00 board Show 8-30-68 Razorback Report 20027 120.00 Show 4-15-68 Razorback Report 19726 48.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of radio station1977 Tax Ct. Memo LEXIS 80">*89 KJWH for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The check was issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KJWH. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-23-66 Razorback Score- 2504 $50.00 board Show 12-15-67 Razorback Score- 3470 50.00 board Show 12-27-68 Razorback Score- 4386 50.00 board Show The following is a schedule which reflects payments made to petitioner by check on the account of radio station KLYR for the production of the Razorback Scoreboard Show and Razorback Report Show:
1977 Tax Ct. Memo LEXIS 80">*90 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KLYR. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-4-64 Football Score- 3819 $50.00 board Show 8-24-65 Razorback Score- 4173 50.00 board Show 12-9-66 Razorback Score- 4901 50.00 board Show 8-8-67 Razorback Report 5327 24.00 Show 11-6-67 Razorback Report 142 48.00 Show 12-10-67 Razorback Report 173 48.00 Show 10-7-68 Razorback Report 5673 24.00 Show 11-12-68 Razorback Report 299 56.00 Show 12-9-68 Razorback Score- 313 50.00 board Show 12-9-68 Razorback Report 312 40.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KCON radio for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KCON. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-25-64 Football Score- 2442 $50.00 board Show 11-23-66 Razorback Score- 3094 50.00 board Show 12-16-67 Razorback Score- 3649 50.00 board Show The following is a schedule which reflects payments made to petitioner by check on the account of KCCB radio for the production of1977 Tax Ct. Memo LEXIS 80">*91 the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KCCB. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-25-65 Razorback Score- 4887 $50.00 board Show 11-25-66 Razorback Score- 5848 50.00 board Show 12-23-67 Razorback Score- 6918 50.00 board Show 12-6-68 Razorback Score- 7841 50.00 board Show The following is a schedule of amounts paid to petitioner Robert D. Cheyne by radio station KAGH for the production of the Razorback Report Show, Razorback Scoreboard Show, or Razorback Basketball Report Show:
The amounts were paid as indicated above and the University of Arkansas did not receive any of the amounts paid.Show Amount Paid Year Received Razorback Scoreboard $50.00 1968 Show Razorback Basketball 55.00 1968 Report Show Razorback Basketball 65.00 1968 Report Show Razorback Report Show 24.00 1968 The following is a schedule1977 Tax Ct. Memo LEXIS 80">*92 which reflects payment made to petitioner by check on the account of radio station KDEW for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check was issued in payment of the amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KDEW. The University of Arkansas did not receive any of the amount paid. The check was endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-11-68 Razorback Score- 569 $50.00 board Show The following is a schedule which reflects payments made to petitioner by check on the account of KDMS radio for the production of the Razorback Scoreboard Show or Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show1977 Tax Ct. Memo LEXIS 80">*93 or Razorback Scoreboard Show over radio station KDMS. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show or Razorback Report Show, Bob Cheyne.Date Payee Amount 12-22-65 Razorback Scoreboard Show $50.00 12-20-66 Razorback Scoreboard Show 50.00 11-20-67 Razorback Report Show 48.00 12-20-67 Razorback Scoreboard Show 50.00 11-20-68 Razorback Report Show 56.00 12-18-68 Razorback Scoreboard Show 50.00 The following is a schedule which reflects payments made to petitioner by check on the account of Radio Enterprises, Inc., - KELD Radio, for the production of the Razorback Scoreboard Show, Razorback Report Show, or Razorback Basketball Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show, Razorback Scoreboard Show, or Razorback Basketball1977 Tax Ct. Memo LEXIS 80">*94 Report Show over radio station KELD. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show, Razorback Scoreboard Show or Razorback Basketball Report Show, Bob Cheyne.Date Payee Check No. Amount 7-6-65 Razorback Score- 8204 $ 50.00 board Show 7-15-66 Razorback Score- board Show 9064 50.00 7-18-67 Razorback Score- 9909 50.00 board Show 11-10-67 Razorback Report 10219 72.00 Show 12-8-67 Razorback Report 10292 48.00 Show 2-8-68 Razorback Report 1437 65.00 Show 3-12-68 Razorback Basketball 10522 55.00 Report Show 7-18-68 Razorback Report 10881 120.00 Show 7-8-68 Razorback Score- 10882 50.00 board Show The following is a schedule which reflects payments made to petitioner on the account of Big Chief Broadcasting Company - KFAY Radio:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KFAY. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Amount 10-9-67 Razorback Report Show $24.00 11-17-67 Razorback Report Show 48.00 3-5-68 Razorback Report Show 48.00 3-5-68 Razorback Scoreboard Show 50.00 12-13-68 Razorback Scoreboard Show 50.00 The following is a schedule which reflects payments made to petitioner by check on the account of KHOG radio for the production of the Razorback Scoreboard Show:
1977 Tax Ct. Memo LEXIS 80">*95 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreback Show over radio station KHOG. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-20-64 Football Scoreboard 383 $50.00 Show 11-27-65 Razorback Scoreboard 1333 50.00 Show 10-29-66 Razorback Scoreboard - 2051 50.00 University of Arkansas 1-24-68 Razorback Scoreboard 318 50.00 Show 12-19-68 Razorback Scoreboard 575 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KNWA radio for the production of the Razorback Report Show or Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KNWA. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report1977 Tax Ct. Memo LEXIS 80">*96 Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 10-23-67 Razorback Report Show 1908 $ 24.00 11-20-67 Razorback Report Show 1968 48.00 1-8-68 Razorback Report Show 2046 48.00 1-8-68 Razorback Scoreboard 2048 50.00 Show 4-13-68 Razorback Report Show 2194 55.00 2-6-68 Razorback Report Show 2102 65.00 12-17-68 Razorback Report Show 2515 120.00 The following is a schedule which reflects payments made to petitioner by check on the account of KSPR radio for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KSPR. The University of Arkansas did not receive any of the amounts paid.Year Paid Amount 1967 $50.00 1968 50.00 The following is a schedule which reflects payments made to petitioner by check on the account of KBJT radio for the production of the Razorback Scoreboard Show and Razorback Report Show:
1977 Tax Ct. Memo LEXIS 80">*97 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KBJT. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-6-65 Razorback Scoreboard 2359 $50.00 Show 11-23-66 Razorback Scoreboard 2640 50.00 Show 10-12-67 Razorback Scoreboard 3399 24.00 Show 11-14-67 Razorback Report Show 3169 48.00 12-11-67 Razorback Report Show 3455 48.00 12-20-67 Razorback Scoreboard 3474 50.00 Show 10-16-68 Razorback Report Show 3989 24.00 11-14-68 Razorback Report Show 3725 56.00 12-5-68 Razorback Scoreboard 4017 50.00 Show 12-5-68 Razorback Report Show 4018 40.00 The following is a schedule which reflects payments made to petitioner by check on the account of KXJK radio for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KXJK. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-9-65 Razorback Scoreboard 4769 $50.00 Show 1-19-67 Razorback Scoreboard 5655 50.00 Show 1-9-68 Razorback Scoreboard 07310 50.00 Show 12-11-68 Razorback Scoreboard 08066 50.00 Show The following is a schedule which reflects amounts paid by radio station KFPW for the1977 Tax Ct. Memo LEXIS 80">*98 production of the Razorback Scoreboard Show and Razorback Report Show to petitioner by check:
These amounts were received by petitioner. The amounts were paid for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KFPW. The University of Arkansas did not receive any of the amounts paid.Year Paid Amount 1964 $ 50.00 1965 50.00 1966 50.00 1967 170.00 1968 170.00 The following is a schedule which reflects payments made to petitioner by check on the account of KFSA-AM for the production of the Razorback Scoreboard Show and Razorback Report Show:
These amounts were received by petitioner. The checks1977 Tax Ct. Memo LEXIS 80">*99 were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KFSA-AM. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-6-65 Razorback Scoreboard 2887 $50.00 Show 11-29-66 Razorback Scoreboard 4075 50.00 Show 11-24-67 Razorback Report Show 4787 48.00 11-20-67 Razorback Report Show 01714 24.00 11-22-68 Razorback Report Show 666500 56.00 1-19-68 Razorback Report Show 12162 98.00 2-9-68 Razorback Report Show 15406 65.00 4-5-68 Razorback Report Show 25610 55.00 10-25-68 Razorback Report Show 61411 24.00 12-6-68 Razorback Report Show 69378 90.00 The following is a schedule which reflects payments made to petitioner by check on the account of KMAG radio for the production of the Razorback Report Show and Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KMAG. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback1977 Tax Ct. Memo LEXIS 80">*100 Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-7-65 Razorback Scoreboard 850 $50.00 Show 2-1-67 Razorback Scoreboard 1613 50.00 Show 11-30-67 Razorback Report Show 2217 72.00 12-2-67 Razorback Report Show 2233 48.00 12-26-67 Razorback Scoreboard 2251 50.00 Show 10-9-68 Razorback Report Show 2713 24.00 11-20-68 Razorback Report Show 2796 56.00 The following is a schedule which reflects payment made to petitioner by check on the account of KTCS radio for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KTCS. The University of Arkansas did not receive any of the amount paid. The check was endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-20-68 Razorback Scoreboard 4665 $50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KHOZ radio for the production of the Razorback Scoreboard Show and Razorback Report Show:
1977 Tax Ct. Memo LEXIS 80">*101 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show over radio station KHOZ. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 9-11-64 Football Scoreboard A-1735 $50.00 Show 9-16-65 Razorback Scoreboard A-3125 50.00 Show 12-5-66 Razorback Scoreboard A-4877 50.00 Show 10-13-67 Razorback Report Show A-6276 24.00 11-3-67 Razorback Report Show A-6380 48.00 12-8-67 Razorback Report Show A-6541 48.00 12-20-67 Razorback Scoreboard A-6598 50.00 Show 10-10-68 Razorback Report Show A-7915 24.00 11-11-68 Razorback Report Show A-8062 56.00 12-9-68 Razorback Scoreboard A-8209 50.00 Show 12-9-68 Razorback Report Show A-8210 40.00 The following is a schedule which reflects payments made to petitioner by check on the account of radio station KAWW for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KAWW. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 1-13-68 Razorback Scoreboard 196 $50.00 Show 12-16-68 Razorback Scoreboard 468 50.00 Show The following is a schedule which reflects payments made to the petitioner by check on the account of radio station KFFA for the production of the Razorback Scoreboard show as follows:
1977 Tax Ct. Memo LEXIS 80">*102 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KFFA.The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-12-64 Razorback Football 691 $50.00 Scoreboard 12-10-65 Razorback Scoreboard 1387 50.00 Show 12-9-66 Razorback Scoreboard 2137 50.00 Show 1-10-68 Razorback Scoreboard 2952 50.00 Show 12-10-68 Razorback Scoreboard 3601 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of radio station KBHS for the production of the Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show over radio station KBHS. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show, Bob Cheyne.Date Payee Check No. Amount 10-6-67 Razorback Report Show 5835 $24.00 11-8-67 Razorback Report Show 5948 48.00 12-10-67 Razorback Report Show 6084 48.00 10-8-68 Razorback Report Show 6999 24.00 11-11-68 Razorback Report Show 7146 56.00 12-5-68 Razorback Report Show 7223 40.00 The following is a schedule which reflects payments made to petitioner by check on1977 Tax Ct. Memo LEXIS 80">*103 the account of radio station KXOW for the production of the Razorback Scoreboard Show and Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KXOW. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed by Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 10-16-67 Razorback Report Show 1006 $16.00 11-10-67 Razorback Report Show 1073 48.00 12-11-67 Razorback Report Show 1130 48.00 1-11-68 Razorback Scoreboard 1307 50.00 Show 10-10-68 Razorback Report Show 2277 24.00 11-8-68 Razorback Report Show 2408 56.00 12-10-68 Razorback Report Show 2506 40.00 12-10-68 Razorback Scoreboard 2507 50.00 Show The following is a schedule which reflects payment made to petitioner by check on the account of KZNG Broadcasting Company for the production of the Razorback Scoreboard Show:
1977 Tax Ct. Memo LEXIS 80">*104 This amount was received by petitioner. The check was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KZNG. The University of Arkansas did not receive any of the amount paid.Date Payee Check No. Amount 6-5-67 University of Arkansas 1953 $50.00 Razorback Scoreboard Show The following is a schedule which reflects payments made to petitioner by check on the account of KARK radio for the production of the Razorback Report Show, Razorback Scoreboard Show and Razorback Basketball Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show, Razorback Scoreboard Show and Razorback Basketball Report Show over radio station KARK. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show, Razorback Scoreboard Show, or Razorback Basketball Report1977 Tax Ct. Memo LEXIS 80">*105 Show, Bob Cheyne.Date Payee Check No. Amount 11-9-67 Razorback Report Show 2476 $48.00 1-9-68 Razorback Scoreboard Show 2942 2.00 2-8-68 Razorback Basketball 3198 65.00 Report Show 3-8-68 Razorback Basketball 3458 55.00 Report Show 12-10-68 Razorback Scoreboard 5749 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KLRA, Inc., for the production of the Razorback Scoreboard Show and Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show and Razorback Scoreboard Show over radio station KLRA. The University of Arkansas did not receive any of the amounts paid.Date Payee Check No. Amount 7-8-66 Razorback Scoreboard 10670 $ 50.00 Show 7-19-67 Razorback Scoreboard 11942 50.00 Show 10-6-67 Razorback Report Show 12193 24.00 11-8-67 Razorback Report Show 12292 48.00 12-1-67 Razorback Report Show 12360 48.00 1-26-68 Razorback Report Show 12588 65.00 3-14-68 Razorback Report Show 12784 55.00 7-18-68 Razorback Scoreboard 13235 50.00 Show 7-18-68 Razorback Report Show 13236 120.00 The following is a schedule which reflects payments made to petitioner by check on the account of KVMA radio for the production of the Razorback Report Show or Razorback Scoreboard Show:
1977 Tax Ct. Memo LEXIS 80">*106 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KVMA. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show or Razorback Report Show, Bob Cheyne.Date Payee Check No. Amount 12-8-66 Bob Cheyne 16810 $50.00 10-9-67 Bob Cheyne 17565 24.00 11-11-67 Razorback Report Show 17620 48.00 12-11-67 Razorback Report Show 17678 48.00 1-9-68 Razorback Scoreboard 17772 50.00 Show 10-10-68 Razorback Report Show 18355 16.00 11-11-68 Bob Cheyne 18444 56.00 The following is a schedule which reflects payments made to petitioner by check on the account of KBOK radio for the production of the Razorback Report Show and Razorback Scoreboard Show:
These amounts were received by petitioner. The checks1977 Tax Ct. Memo LEXIS 80">*107 were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KBOK. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-16-64 Football Scoreboard Show 9516 $50.00 11-27-65 Razorback Scoreboard 10430 50.00 Show 11-23-66 Razorback Scoreboard 11389 50.00 Show 10-10-67 Razorback Report Show 83 24.00 11-13-67 Razorback Report Show 182 48.00 12-11-67 Razorback Report Show 255 48.00 12-15-67 Razorback Scoreboard 277 50.00 Show 10-9-68 Razorback Report Show 1073 24.00 11-11-68 Razorback Report Show 1171 56.00 12-10-68 Razorback Report Show 1236 40.00 12-10-68 Razorback Scoreboard 1237 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of radio station KENA for the production of the Razorback Report Show and Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KENA. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback1977 Tax Ct. Memo LEXIS 80">*108 Report Show or Razorback Scoreboard Show and all checks were further endorsed by Bob Cheyne except Check No. 463.Date Payee Check No. Amount 10-18-67 Razorback Report Show 463 $24.00 11-20-67 Razorback Report Show 500 48.00 12-31-67 Razorback Report Show 563 48.00 1-15-68 Razorback Scoreboard 583 40.00 Show 10-9-68 Razorback Report Show 1004 24.00 12-16-68 Razorback Report Show 1121 96.00 12-16-68 Razorback Scoreboard 1120 50.00 Show The following is a schedule which reflects payment made to petitioner by check on the account of Newport Broadcasting Company, Radio Station KTPA, for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KTPA. The University of Arkansas did not receive any of this amount paid. The check was endorsed by Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 1-13-68 Razorback Scoreboard 1129 $50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KDRS radio for the production of the Razorback Report Show and Razorback Scoreboard Show:
1977 Tax Ct. Memo LEXIS 80">*109 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KDRS. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show or Razorback Report Show, Bob Cheyne.Date Payee Check No. Amount 11-29-65 Razorback Scoreboard 3358 $50.00 Show 10-5-67 Razorback Report Show 242 24.00 11-2-67 Razorback Report Show 334 52.00 12-2-67 Razorback Report Show 446 44.00 2-12-68 Razorback Scoreboard 653 50.00 Show 8-16-68 Razorback Scoreboard 1093 50.00 Show 10-5-68 Razorback Report Show 1224 24.00 12-4-68 Razorback Report Show 1372 40.00 12-30-68 Razorback Report Show 1439 56.00 The following is a schedule which reflects payments made to petitioner by check on the account of radio station KADL for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KADL. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-31-65 Razorback Scoreboard 1733 $50.00 Show 12-27-66 Razorback Scoreboard 2094 50.00 Show 1-10-68 Razorback Scoreboard 2457 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of radio station KOTN for the production1977 Tax Ct. Memo LEXIS 80">*110 of the Razorback Report Show or Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KOTN.The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show or Razorback Report Show, Bob Cheyne.Date Payee Check No. Amount 10-9-67 Razorback Report Show 1070 $24.00 1-15-68 Razorback Scoreboard 01279 50.00 Show 4-15-68 Razorback Report Show 1477 98.00 10-14-68 Razorback Report Show 1988 24.00 11-11-68 Razorback Report Show 02072 56.00 12-10-68 Razorback Scoreboard 02155 50.00 Show 12-10-68 Razorback Report Show 02156 40.00 The following is a schedule which reflects payments made to petitioner by check on the account of KPOC radio for the production of the Razorback Scoreboard Show:
These amounts were1977 Tax Ct. Memo LEXIS 80">*111 received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KPOC. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-17-65 Razorback Scoreboard 11940 $50.00 Show 12-20-66 Bob Cheyne 387 50.00 2-28-68 Razorback Scoreboard 13564 50.00 Show The following is a schedule which reflects payment made to petitioner by check on the account of radio station KTPA for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KTPA. The University of Arkansas did not receive any of the amount paid. The check was endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 4-18-67 Razorback Scoreboard 541 $50.00 Show The following is a schedule which reflects payment made to petitioner by check on the account of KAMO radio for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check1977 Tax Ct. Memo LEXIS 80">*112 was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KAMO. The University of Arkansas did not receive any of the amount paid. The check was endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-4-68 Razorback Scoreboard Show 1325 $50.00 The following is a schedule which reflects payments made to petitioner by check on the account of KWCB radio for the production of the Razorback Scoreboard Show and Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting Razorback Scoreboard Show or Razorback Report Show over radio station KWCB. The University of Arkansas did not receive1977 Tax Ct. Memo LEXIS 80">*113 any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-8-65 Razorback Scoreboard 3261 $50.00 Show 12-12-66 Razorback Scoreboard 3935 50.00 Show 10-9-67 Razorback Report Show 4481 24.00 11-10-67 Razorback Report Show 4563 48.00 12-11-67 Razorback Report Show 4621 48.00 1-10-68 Razorback Scoreboard 4654 50.00 Show 11-10-68 Razorback Report Show 5295 56.00 12-10-68 Razorback Report Show 127 90.00 and Scoreboard Show 10-10-68 Razorback Report Show 5210 24.00 The following is a schedule which reflects payments made to petitioner by check on the account of KBRS-AM for the production of the Razorback Scoreboard Show and Razorback Report Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting Razorback Scoreboard Show and Razorback Report Show over radio station KBRS-AM. The University of Arkansas did not receive any of the amounts paid.Date Payee Check No. Amount 12-3-65 Razorback Scoreboard 3459 $50.00 Show 11-30-66 Razorback Scoreboard 4142 50.00 Show 10-20-67 Razorback Report Show 01713 24.00 11-24-67 Razorback Report Show 04786 48.00 12-29-67 Razorback Report Show 9068 48.00 1-5-68 Razorback Report Show 10147 50.00 10-18-68 Razorback Report Show 59932 24.00 The following is a schedule which reflects payments made to petitioner by check on the account of KWAK radio for the production of the Razorback Scoreboard Show and Razorback Report Show:
1977 Tax Ct. Memo LEXIS 80">*114 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KWAK. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-7-64 Football Scoreboard 1042 $50.00 Show 12-10-65 Razorback Scoreboard 2110 50.00 Show 12-9-66 Razorback Scoreboard 2894 50.00 Show 10-10-67 Razorback Report Show 3519 24.00 11-10-67 Razorback Report Show 3598 48.00 12-11-67 Razorback Report Show 3640 44.00 12-15-67 Razorback Scoreboard 3681 50.00 Show 10-10-68 Razorback Report Show 4278 24.00 11-11-68 Razorback Report Show 4339 56.00 12-10-68 Razorback Report Show 4395 40.00 12-10-68 Razorback Report Show 4408 50.00 The following is a schedule which reflects payments made to petitioner by check on the account of radio KTFS for the production of the Razorback Report Show or Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Report Show or Razorback Scoreboard Show over radio station KTFS. The1977 Tax Ct. Memo LEXIS 80">*115 University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show, Razorback Scoreboard Show, Razorback Report Show, Bob Cheyne, or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 10-12-67 Razorback Report Show 662 $24.00 11-10-67 Razorback Report Show 749 48.00 12-13-67 Razorback Report Show 843 48.00 1-11-68 Razorback Scoreboard 929 50.00 Show 10-9-68 Razorback Report Show 1765 24.00 11-11-68 Razorback Report Show 1877 56.00 12-13-68 Razorback Report Show 1974 40.00 12-13-68 Razorback Scoreboard 1975 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of KRLW radio for the production of the Razorback Scoreboard Show:
These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KRLW. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-25-66 Razorback Scoreboard 6496 $50.00 Show 2-15-68 Razorback Scoreboard 7373 50.00 Show 12-6-68 Razorback Scoreboard 7984 50.00 Show The following is a schedule which reflects payments made to petitioner by check on the account of radio KWRF for the production of the Razorback Scoreboard Show and Razorback Report Show:
1977 Tax Ct. Memo LEXIS 80">*116 These amounts were received by petitioner. The checks were issued in payment of amounts due the listed payee for broadcasting the Razorback Scoreboard Show or Razorback Report Show over radio station KWRF. The University of Arkansas did not receive any of the amounts paid. All checks were endorsed Razorback Report Show or Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 11-13-64 Football Scoreboard Show 343 $50.00 12-5-66 Razorback Scoreboard 1710 50.00 Show 11-7-67 Razorback Report Show 2328 48.00 12-4-67 Razorback Report Show 2371 48.00 12-15-67 Razorback Scoreboard 2406 50.00 Show 10-7-67 Razorback Report Show 2278 24.00 10-7-68 Razorback Report Show 2968 24.00 11-7-68 Razorback Report Show 3030 56.00 The following is a schedule which reflects a payment made to petitioner by check on the account of KSUD radio for the production of the Razorback Scoreboard Show:
This amount was received by petitioner. The check was issued in payment of amount due the listed payee for broadcasting the Razorback Scoreboard Show over radio station KSUD. The University of Arkansas did not receive any of this amount paid. The check was endorsed Razorback Scoreboard Show, Bob Cheyne.Date Payee Check No. Amount 12-13-68 Razorback Scoreboard 4231 $45.00 Show Petitioner did not keep any contemporaneous records of the amounts he received from the radio stations for any of the three radio shows produced by him.
Petitioner prepared without assistance his Federal income tax returns for the years 1964 through1977 Tax Ct. Memo LEXIS 80">*117 1968.
Petitioner has a bachelor of science degree from the University of Arkansas in Journalism and has taken a few hours of graduate work in history. In addition, he served as the editor of a Navy newspaper during World War II.
During the investigation of petitioner's tax liabilities for the years 1964 through 1968, Special Agent Connaughton asked petitioner's counsel for any records of petitioner's income for the years in question. There were no specific records reflecting amounts received by petitioner from the radio stations. However, by examining bank deposits Mr. Connaughton determined income relating to the radio stations. The deposit slips did not specifically list the radio stations, but rather reflected only the amount of the deposit.
The national advertising in the University of Arkansas football programs was, prior to and during the years in question, managed by the Spencer Advertising Company, New York, New York. It furnished the University of Arkansas pre-printed advertisements which were used in the University of Arkansas football programs and obtained national advertising clients for the University of Arkansas football programs. Pursuant to a contract with1977 Tax Ct. Memo LEXIS 80">*118 the University of Arkansas, Spencer Advertising Company was to keep 15 percent of the amounts paid for advertising and was to remit the balance (less costs of printing) to the University of Arkansas.
Warren King, an internal auditor for the University of Arkansas, conducted a routine audit of the advertising income of the University of Arkansas Athletic Department, and discovered that the University of Arkansas should have received $12,135.62 from Spencer Advertising Compny for the years 1964 through 1968, but only received $350 during such period.
Petitioner caused a letter to be sent to the Spencer Advertising Company directing that $350 be sent to the University of Arkansas and that the balance be paid to him. These instructions were carried out by Spencer Advertising Company.
Petitioner caused to be sent to the University of Arkansas a report on national advertising in the 1968 football program which did not accurately reflect income from the Spencer Advertising Company. The report showed total revenue from Spencer as $2,600 and net revenue as $350 when, in truth and fact, the total revenue was $6,053.36 and net revenue was $3,803.36.
Petitioner was aware of the actual1977 Tax Ct. Memo LEXIS 80">*119 revenue from Spencer Advertising Company which he had received, but he did not correctly report to the University of Arkansas with respect to these funds.
There were no University of Arkansas records listing amounts received from Spencer Advertising Company for national advertising in the University of Arkansas football programs outside of the $350 received in 1968. The Athletic Department advertising is set out in the concession part of the Athletic Section of the University of Arkansas books and records.
Although petitioner cooperated with Warren King with respect to finding out why certain companies were not billed for advertising, he did not disclose to University officials that he had received the payments from Spencer Advertising Company for such advertising.
Because of petitioner's actions with respect to the advertising income from Spencer Advertising Company, he was asked to make restitution of the money and to resign his position at the University of Arkansas.
On May 22, 1969, petitioner wrote a letter to the then president of the University of Arkansas asking for a second chance and requesting forgiveness for what he had done. In that letter he expressed regret1977 Tax Ct. Memo LEXIS 80">*120 for the grief he had caused those he had known and respected at the University of Arkansas, including John Barnhill, the athletic director.
The following is a schedule which reflects net payments made by Spencer Advertising Company from national advertising proceeds with respect to the University of Arkansas football programs for the years in question:
These amounts were received by petitioner. The University of Arkansas did not receive any of the amounts. The amounts were not reported on petitioners' Federal income tax returns for the years in question. Petitioner repaid in 1969 to the University1977 Tax Ct. Memo LEXIS 80">*121 of Arkansas the amounts he received from the Spencer Advertising Company.Date Payee Check No. Amount 3-2-64 Robert Cheyne - Program 5808 $1,831.34 Manager U of A 3-10-64 Robert Cheyne - Program 5930 221.62 Manager U of A 2-26-65 Robert Cheyne - Program 7408 2,462.28 Manager U of A 2-15-66 Robert Cheyne - Program 9055 1,865.23 Manager U of A 2-23-66 Robert Cheyne - Program 9181 553.92 Manager U of A 3-6-67 Robert Cheyne - Program 11049 845.29 Manager U of A 4-11-67 Robert Cheyne - Program 11531 1,915.21 Manager U of A 3-8-68 Robert Cheyne - Program 13426 2,440.73 Manager U of A On July 12, 1967, the Fort Smith Quarterback Club issued check number 871 in the amount of $350 payable to Bob Cheyne, Program Manager, in payment of amounts due the University of Arkansas for advertising in the University of Arkansas football programs. This amount was received by petitioner, but was not reported on petitioners' 1967 Federal income tax return. The University of Arkansas did not receive any of this amount.
On September 8, 1967, Mr. and Mrs. Thomas D. Olmstead issued check number 1667 in the amount of $200 in payment of amounts due the University of Arkansas for advertising in the University of Arkansas football program which related to the Heber Springs Razorback Club. This amount was received by petitioner, but was not reported on petitioners' 1967 Federal income tax return. The University of Arkansas did not receive any of this amount.
During the period 1964 through 1968, petitioner served as announcer in the annual State Highschool Basketball and Annual Allstar Football-Basketball games. For these services, the Arkansas Broadcasters Association compensated petitioner by check as1977 Tax Ct. Memo LEXIS 80">*122 follows:
These amounts were not reported on petitioners' Federal income tax returns for the periods in question.Date Payee Check No. Amount 3-2-64 Bob Cheyne 18 $175.00 8-28-64 Bob Cheyne 48 75.00 4-6-65 Bob Cheyne 16 105.00 8-28-65 Bob Cheyne 36 37.50 8-25-66 Bob Cheyne 154 75.00 3-9-67 Bob Cheyne 112 125.00 9-20-67 Bob Cheyne 106 75.00 8-17-68 Bob Cheyne 194 25.00 During the years 1967 and 1968 petitioner wrote articles for the annual magazine entitle "Razorback State Football" published by Wonder State Publications. For his services he received $200 during each of the years 1967 and 1968. These amounts were not reported on petitioners' 1967 and 1968 Federal income tax returns.
For the taxable year 1964, petitioners deposited $13,738.80 to their joint checking account; withheld cash in the amount of $554; redeposited cash or deposited loans (non-taxable) in the amount $810of, and had unreported income in the amount of $4,272.84.
For the taxable year 1965, petitioners deposited $17,858.65 to their joint checking account; withheld cash in the amount of $69.70; deposited non-taxable sums in the amount of $3,790.87; 1977 Tax Ct. Memo LEXIS 80">*123 and had unreported income in the amount of $4,837.43.
For the taxable year 1966, petitioners deposited $17,170.36 to their joint checking account; withheld cash in the amount of $218.26; deposited non-taxable sums in the amount of $1,731.16; had unreported income from these bank deposits in the amount of $6,812.02; and had additional unreported income in the amount of $675 which was not included in the deposits for 1966.
For the taxable year 1967, petitioners deposited $16,156.06 to their joint checking account; withheld cash in the amount of $1,202.50; deposited non-taxable sums in the amount of $318.46; had unreported income from deposits in the amount of $7,466.84; and had additional unreported income for the year 1967 which was not included in the deposits in the amount of $2,154.91.
For the taxable year 1968, petitioners deposited $18,087.35 to their joint checking account; withheld cash in the amount of $1,743.90; deposited non-taxable sums in the amount of $379.90; had unreported income from deposits in the amount of $9,656.05; and had additional unreported income not deposited in the amount of $2,122.
In 1967 the petitioner entered and won a contest of College and1977 Tax Ct. Memo LEXIS 80">*124 University Sports Information Directors. His prize was a 1968 Chevrolet Camaro.This prize was not reported as income on petitioners' 1968 Federal income tax return, the year of receipt. The value at the time of receipt was $2,300 and is includable in petitioners' income for 1968.
During each of the years 1965, 1966, 1967, and 1968, J.D. Fisher Buick Agency, Fayetteville, Arkansas, furnished petitioner a new automobile in exchange for advertising in the University of Arkansas football programs. The value of the use of this car which was not reported in the income tax returns of petitioners for these years was $600 per year. The automobile was used by petitioner on University business 50 percent of the time and for personal purposes 50 percent of the time.
During each of the years 1966, 1967, and 1968, the Velda Rose Motel, Hot Springs, Arkansas, furnished petitioner with due bills for motel accommodations in exchange for advertising in the University of Arkansas football programs. The value of these due bills which was not reported in the Federal income tax returns of petitioners for these years $350was per year.
Petitioner did not keep books and records of the amounts1977 Tax Ct. Memo LEXIS 80">*125 paid for additional business expenses not claimed on his returns.
Some of the amounts petitioner incurred as additional business expenses were reimbursed to him by the University of Arkansas by the procedure of obtaining cash advances from the Razorback Fund. These cash advances were replaced in the Razorback Fund when petitioner was paid pursuant to his voucher claims. The University of Arkansas checks paying the voucher claims generally went directly to the Razorback Fund, and, although payable to petitioner, were endorsed by Vera Moody for him. The cash obtained from the University of Arkansas pursuant to the vouchers did go back into the Razorback Fund.
Petitioner traveled extensively and obtained cash advances from the Razorback Fund one to two times per week during the various sports seasons.
Petitioner incurred liability for football tickets which was, in fact, paid by the University of Arkansas Athletic Department.
Some of the amounts paid to petitioner by the NCAA for travel reimbursement were also claimed and paid to petitioner by the University of Arkansas. Hence, additional out-of-pocket expenses incurred by petitioner on these trips were paid by the University1977 Tax Ct. Memo LEXIS 80">*126 of Arkansas.
Petitioner attended an NCAA meeting in Tucson, Arizona, in January 1967, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher for this trip, and the fund was reimbursed by the University of Arkansas.
Petitioner attended an NCAA meeting in Louisville, Kentucky, in March 1967, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher for this trip, and the fund was reimbursed by the University of Arkansas.
Petitioner attended an NCAA meeting in New York, New York, in June 1967, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher for this trip, and the fund was reimbursed by the University of Arkansas.
Petitioner attended an NCAA meeting in New York, New York, in January 1968, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher, and the fund was reimbursed by the University of Arkansas.
Petitioner attended an NCAA meeting in Santa Barbara, California, in February 1968, 1977 Tax Ct. Memo LEXIS 80">*127 and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher, and the fund was reimbursed by the University of Arkansas for this trip.
Petitioner attended an NCAA meeting in Los Angeles, California, in March 1968, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher, and the fund was reimbursed by the University of Arkansas.
Petitioner attended an NCAA meeting in New York, New York, in September 1968, and was reimbursed by the NCAA for travel and per diem. He obtained a cash advance from the Razorback Fund, submitted a voucher for this trip, and the fund was reimbursed by the University of Arkansas.
The University of Arkansas reimbursed petitioner for taxi, telephone, and some miscellaneous expenses.
Petitioner paid the following deductible business expenses in connection with the Razorback Scoreboard Show for the years in issue:
Type of Expense 1964 1965 1966 1967 1968 Engineering $250.00 $250.00 $250.00 $250.00 $250.00 Wire Information 75.00 75.00 75.00 75.00 75.00 Fee Transportation and 300.00 300.00 300.00 300.00 300.00 Meals for Spotters Subscription Fee 100.00 100.00 100.00 100.00 100.00 for Weekly Foot- ball Service Total $725.00 $725.00 $725.00 $725.00 $725.00 1977 Tax Ct. Memo LEXIS 80">*128 Petitioner paid the following deductible business expenses in connection with the Razorback Report Show for the years in issue:
Type of Expense 1964 1965 1966 1967 1968 Engineering $ 500.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00 Guest Fees 300.00 300.00 300.00 300.00 300.00 Tapes 150.00 150.00 150.00 150.00 150.00 Promotional Tapes 250.00 250.00 250.00 250.00 250.00 CATV Cable 60.00 60.00 60.00 60.00 60.00 Total $1,260.00 $1,260.00 $1,260.00 $1,260.00 $1,260.00 Petitioner paid the following deductible business expenses in connection with the Razorback Basketball Report Show for the years in issue:
Type of Expense 1968 Guest Fees $720.00 Tapes 120.00 Total $840.00 Petitioner paid other deductible business expenses for the years in issue, as follows:
Type of Expense 1964 1965 1966 1967 1968 Travel Uniforms $120.00 $ 40.00 $120.00 $120.00 Cleaning of Travel 40.00 40.00 40.00 $ 40.00 40.00 Uniforms Attache Case and 75.00 60.00 10.00 75.00 10.00 Spotter Board Professional Dues 50.00 50.00 50.00 50.00 50.00 Total $285.00 $190.00 $220.00 $165.00 $220.00 1977 Tax Ct. Memo LEXIS 80">*129 Petitioners and respondent did not execute an agreement extending the period for assessment of taxes for the year 1964.
Petitioners' counsel and respondent executed an agreement with respect to the taxable year 1965 extending the period for assessment of taxes for that year to April 15, 1973. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioners' counsel and respondent executed an agreement with respect to the taxable years 1965 and 1966 extending the period for assessment of taxes for those years to December 31, 1974. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for such years.
Petitioners' counsel and respondent executed an agreement with respect to the taxable year 1966 extending the period for assessment of taxes for that year to December 31, 1975. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioners' counsel and respondent executed an agreement with respect to the taxable year 1965 extending the period for assessment of taxes for that year to December 31, 1975. 1977 Tax Ct. Memo LEXIS 80">*130 Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioners' counsel and respondent executed an agreement with respect to the taxable year 1967 extending the period for assessment of taxes for that year to December 31, 1974. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioners' counsel and respondent executed an agreement with respect to the taxable year 1967 extending the period for assessment of taxes for that year to December 31, 1975. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioners' counsel and respondent executed a consent with respect to the taxable year 1968 extending the period for assessment of taxes for that year to December 31, 1975. Said agreement is valid only if there is a 25 percent omission of gross income from petitioners' return for that year.
Petitioner was indicted, pursuant to
section 7206(1) of the Code, in Criminal No. F-73-CR-7 in the United States District Court for the Western District of Arkansas, on two counts that1977 Tax Ct. Memo LEXIS 80">*131 he "wilfully and knowingly" subscribed to his 1967 and 1968 Federal income tax returns which were verified by a written declaration that they were made under penalties of perjury and filed with the Internal Revenue Service. He entered a plea of not guilty to the indictment. He was tried and on November 29, 1973, a not guilty verdict was rendered on both counts of the indictment. This is reflected in the judgment of the United States District Court, Western District of Arkansas, dated November 29, 1973.ULTIMATE FINDINGS OF FACT
1. No part of the underpayment of income tax for each of the years 1964 through 1968 was due to fraud on the part of petitioner.
2. The assessment of a deficiency for the year 1964 is barred by the statute of limitations under the provisions of
section 6501(a) of the Code.3. For each of the years 1965 through 1968 the petitioners omitted from each of their Federal income tax returns gross income in excess of 25 percent of the amount of gross income stated on such returns. Therefore, under
section 6501(e)(1)(A) the assessment of deficiencies for each of the years 1965 through 1968 is not barred by the 6-year period of limitations, as extended1977 Tax Ct. Memo LEXIS 80">*132 by the parties pursuant tosection 6501(c)(4) .4. Petitioner is entitled to deduct the following business expenses for the years in issue:
Year Amount 1964 $2,280.00 1965 2,175.00 1966 2,205.00 1967 2,130.00 1968 3,045.00 5. Petitioner realized income of $300 per year for the taxable years 1965 through 1968 from the use of an automobile furnished by J. D. Fisher Buick Company.
6. Petitioner realized income of $350 per year for 1966, 1967, and 1968 from due bills for motel accommodations furnished to him in exchange for advertising in the University of Arkansas football programs.
OPINION
Issue 1--Collateral Estoppel Petitioner contends that respondent is collaterally estopped from asserting the additions to tax for fraud for the years 1967 and 1968 because of his acquittal on criminal charges of filing false and fraudulent income tax returns under
section 7206(1) . Respondent argues that petitioner's position is without merit and unsupported by law.We agree with the respondent that the doctrine of collateral estoppel does not apply in these circumstances. The degree of the burden of proof is greater in criminal cases than in civil1977 Tax Ct. Memo LEXIS 80">*133 cases.
Helvering v. Mitchell, 303 U.S. 391">303 U.S. 391Lias v. Commissioner, 24 T.C. 280">24 T.C. 280235 F.2d 879 (4th Cir. 1956) , cert. denied353 U.S. 935">353 U.S. 935 (1957), this Court said at page 321:The final contention of the petitioner that the jury found him not guilty of willful attempt to evade income taxes for the years 1942 to 1946, inclusive, which cover a part of the years before us, requires no extended discussion. In
Helvering v. Mitchell, 303 U.S. 391">303 U.S. 391And in
Amos v. Commissioner, 43 T.C. 50">43 T.C. 50360 F.2d 358 (4th Cir. 1965) , we said at page 57:What respondent does contend here is that under the doctrine of collateral estoppel a taxpayer who has been convicted of willfully attempting to evade his income taxes may not thereafter relitigate in this forum the question whether the tax deficiencies resulting from his previous attempted evasion were "due to fraud. 1977 Tax Ct. Memo LEXIS 80">*134 " Clearly, such a contention is not inconsistent with the principle laid down in
303 U.S. 391"> Helvering v. Mitchell, supra , because the main thrust of that case was simply that an acquittal in a criminal proceeding wherein agreater burden of proof is required does not work an estoppel in a civil case dependent upon the same finding of fact, but wherein the burden of proof is lesser. Because an acquittal does not negative a fact in a subsequent suit wherein alesser degree of proof is required, the same conclusion does not follow from the converse of such a situation, i.e., where the criminal trial resulted in a conviction. * * *See also
Otsuki v. Commissioner, 53 T.C. 96">53 T.C. 96Stratton v. Commissioner, 54 T.C. 255">54 T.C. 255Benes v. Commissioner, 42 T.C. 358">42 T.C. 358355 F.2d 929 (6th Cir. 1966) ;Gonzalez v. Commissioner, T.C. Memo. 1977-240Accordingly, we hold that petitioner's acquittal on criminal charges of filing false and fraudulent income tax returns for 1967 and 1968 did not determine that he did not file false and fraudulent returns1977 Tax Ct. Memo LEXIS 80">*135 for civil purposes and, therefore, is not a bar to a subsequent civil determination which asserts civil fraud penalties.
Issue 2--Additions to Tax under Section 6653(b) While respondent may not be collaterally estopped to claim civil fraud, it does not necessarily follow that he has sustained his burden of proof as to fraud for the years 1964 through 1968. Fraud is never presumed. It must be proved by clear and convincing evidence.
Carter v. Campbell, 264 F.2d 930, 935 (5th Cir. 1959)Green v. Commissioner, 66 T.C. 538">66 T.C. 538Pigman v. Commissioner, 31 T.C. 356">31 T.C. 356Section 7454(a) ;Rule 142(b), Tax Court Rules of Practice and Procedure ;Arlette Coat Co. v. Commissioner, 14 T.C. 751">14 T.C. 751Gajewski v. Commissioner, 67 T.C. 181">67 T.C. 181Mitchell v. Commissioner, 118 F.2d 308, 310 (5th Cir. 1941)40 B.T.A. 424">40 B.T.A. 424 (1939),1977 Tax Ct. Memo LEXIS 80">*136 on remand45 B.T.A. 822">45 B.T.A. 822 (1941);Ferguson v. Commissioner, 14 T.C. 846">14 T.C. 846Stoltzfus v. United States, 398 F.2d 1002, 1004 (3d Cir. 1968)393 U.S. 1020">393 U.S. 1020 (1969);Mitchell v. Commissioner, supra at 310In fairness to the parties we have made detailed findings of fact based upon the stipulations, documentary evidence, and the testimony of several witnesses.
Reininger v. Commissioner, 11 T.C.M. 444 (1952)After examining and evaluating the facts of record, we conclude that the respondent has failed to carry his burden of proving fraud by clear and convincing evidence. In addition to the elements previously enumerated, we have given weight to the fact that the petitioner was acquitted by his peers of criminal tax charges, even though we are cognizant of the greater burden of proof required in such an action. We have also given weight to the candor and credibility of the petitioner and to his reputation1977 Tax Ct. Memo LEXIS 80">*138 for honesty and veracity. Issue 3--Statute of Limitations
Having decided that there was no fraud, it follows that the statute of limitations is a bar to the assessment and collection of any deficiency for the year 1964.
Section 6501(a) of the Code. The period of assessment for 1964 was not extended by agreement of the parties. However, as to the years 1965 through 1968, the respondent has alleged and contends that he is entitled to the 6-year period provided for insection 6501(e)(1)(A) ,section 6501(c)(4) . Petitioners' Federal income tax returns for the years 1965 through 1968 were filed on the following dates:Year Date Return Filed 1965 April 15, 1966 1966 April 15, 1967 1967 April 15, 1968 1968 April 15, 1969 1977 Tax Ct. Memo LEXIS 80">*139 Timely agreements executed by the parties extended the period for assessment for each of the above years to December 31, 1975. The statutory notice of deficiencies covering such years was mailed to the petitioners on December 18, 1975, which date was prior to the expiration of the 6-year period of limitations applicable under
section 6501(e)(1)(A) as extended by the parties undersection 6501(c)(4) .Twenty-five percent of the amount of "gross income" stated in the returns for the years in question was as follows:
Gross Income 25 Percent Year Stated of Gross Income 1965 $10,706.59 $2,676.65 1966 10,621.98 2,655.50 1967 11,522.75 2,880.69 1968 13,153.91 3,288.48 The amounts omitted from gross income, as reflected in our findings of fact, exceed 25 percent of stated gross income in each of the years 1965 through 1968. Consequently, it is clear that the assessment and collection of deficiencies in petitioners' Federal income taxes for the years 1965 through 1968 are not barred by the statute of limitations. We so hold.
Issue 4--Business Expenses Petitioner contends that he paid substantial business expenses in connection with his1977 Tax Ct. Memo LEXIS 80">*140 duties at the University of Arkansas, and in particular with respect to the Razorback Scoreboard Show, the Razorback Report Show and the Razorback Basketball Report Show. He has claimed the following business expenses:
Year Total Expenses 1964 $5,939.00 1965 6,014.00 1966 5,959.00 1967 6,014.00 1968 7,102.00 It is respondent's position that petitioner is not entitled to the claimed business expenses.
Petitioner did not maintain any books and records of his cash payments to engineers, guests, and spotters or other expenditures. Although there are no substantiating records, the petitioner has given credible testimony regarding the expenses and has urged us to apply the approximation rule of
Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930)Sharon v. Commissioner, 66 T.C. 515">66 T.C. 515Cohan v. Commissioner, supra at 544Issue 5--Use of Automobiles The issue as to the petitioner's use of automobiles furnished by the J. D. Fisher Company is factual. Petitioner contends that he did not realize income in the years 1965 through 1968 in the amount of $600 per year from the use of such automobiles because they were supplied to the University of Arkansas Athletic Department and were used by the petitioner when he was1977 Tax Ct. Memo LEXIS 80">*142 on University business. To the contrary, respondent's position is that $600 is includable in the income of petitioner for each year because (1) he admitted he used the cars in commuting from home to work and for other personal purposes and (2) he failed to allocate the value of the cars attributable to business purposes. We are satisfied, as set forth in our findings of fact, that such automobiles were used 50 percent of the time on University business and 50 percent of the time for personal purposes.
Dole v. Commissioner, 43 T.C. 697">43 T.C. 697351 F.2d 308 (1st Cir. 1965) . Therefore, we hold that the petitioner realized income of $300 for each of the years 1965 through 1968.Issue 6--Use of Motel Accommodations This issue is also factual. Petitioner contends that due bills provided to the University of Arkansas for his accommodations at the Velda Rose Motel in Hot Springs, Arkansas, do not constitute income to him for the years 1966, 1967, and 1968 in the amount of $350 per year because he was on University business on such trips. Respondent, on the other hand, argues that the petitioner has failed to carry his burden1977 Tax Ct. Memo LEXIS 80">*143 of proof on this issue and, therefore, he did realize additional income of $350 each year for his use of the motel accommodations during 1966, 1967, and 1968.
We agree with the respondent. The only evidence in the record is contained in the stipulation of facts that the Velda Rose Motel "furnished Robert D. Cheyne with due bills for motel accommodations in exchange for advertising in the University of Arkansas football programs," and that the value ( $350 for each year) of the due bills was not reported in petitioners' income tax returns for the years 1966, 1967, and 1968. There is no evidence indicating whether the accommodations were furnished to petitioner when he was on University business. He has failed in his burden of proof on this issue. Respondent's determination in this respect is presumptively correct.
Welch v. Helvering, 290 U.S. 111">290 U.S. 111To reflect the concessions made by the parties and our conclusions on the disputed issues,
Decision will be entered under Rule 155 .Footnotes
1. All statutory references herein are to the Internal Revenue Code of 1954, as amended and in effect for the years in issue, unless otherwise indicated.↩
2. We commend counsel for their thorough stipulations of facts and the expeditious manner in which testimony was elicited.↩
3. Paul V. Galloway, Bishop of the Methodist Church, testified regarding petitioner's good reputation in the communities where he has lived. Petitioner's parents were in the Salvation Army; his two brothers are ministers; and he is a lay leader of the North Arkansas Conference of the Methodist Church.↩
4.
SEC. 6501 . LIMITATIONS ON ASSESSMENT AND COLLECTION.* * *
(e) Substantial Omission of Items.--Except as otherwise provided in subsection (c)--
(1) Income Taxes.--In the case of any tax imposed by subtitle A--
(A) General rule.--If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed. For purposes of this subparagraph--↩
5. We believe the petitioner's testimony that he paid the former basketball coach, P. T. "Duddy" Waller, $720 during the 1967-1968 season for appearing with him on about 24 pre-game Razorback Basketball Report Shows. It is inconceivable that Mr. Waller got only $5 per program.↩
Document Info
Docket Number： Docket No. 1257-76.
Citation Numbers： 36 T.C.M. 1439, 1977 Tax Ct. Memo LEXIS 80, 1977 T.C. Memo. 361
Filed Date： 10/11/1977
Precedential Status： Non-Precedential
Modified Date： 11/20/2020