Wiksell v. Commissioner
| Decision Date | 09 March 1994 |
| Docket Number | Docket No. 11752-91. |
| Citation | 67 T.C.M. 2360 |
| Parties | David L. Wiksell and Margaret Wiksell v. Commissioner. |
| Court | U.S. Tax Court |
David L. Wiksell, pro se. Bruce I. Hochman, for petitioner Margaret Wiksell. Glorianne Gooding-Jones, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined the following deficiencies in, and additions to, petitioners' Federal income taxes:
Additions to Tax
----------------
Year Income Tax Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6661
1984 .................. $153,739 $ 7,687 * $ 38,435
1985 .................. 692,750 34,638 * 173,188
* 50 percent of the interest computed on the income tax deficiency at the time of assessment or payment of
the tax
By Amended Answer, respondent asserted deficiencies and additions to tax as follows:
Additions to Tax
----------------
Year Income Tax Sec. 6653(b)(1) Sec. 6653(b)(2) Sec. 6661
1984 ...................... $221,294 $110,647 * $ 55,324
1985 ...................... 789,919 394,960 ** 197,480
Alternative Additions to Tax
----------------------------
Year Sec. 6653(a)(1) Sec. 6653(a)(2)
1984 ........................................ $11,065 ***
1985 ........................................ 39.496 ****
* 50 percent of the interest on $221,294
** 50 percent of the interest on $789,919
*** 50 percent of the interest on $221,294
**** 50 percent of the interest on $789,919
Unless otherwise indicated, all section references are to sections of the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Respondent has conceded all additions to tax as to petitioner Margaret Wiksell (Margaret). Margaret has conceded the income tax deficiencies asserted by respondent in the Amended Answer.
The issues remaining for decision are:
(1) Whether respondent's Motion to Dismiss for Lack of Prosecution as to David L. Wiksell (David) should be granted.
(2) Whether Margaret is an innocent spouse as defined in section 6013(e).
Some of the facts have been stipulated by Margaret and respondent and are so found. Petitioners resided in Newhall, California, when they filed their petition.
Petitioners were married in 1960, legally separated in 1988 and divorced in December, 1992. With the exception of the times David was imprisoned, petitioners continuously resided together from the inception of their marriage to the date of the trial of their case.
Petitioners had three children. Margaret completed five years of college, graduating as a registered nurse in 1979. She worked part-time as a registered nurse during 1984 and 1985.
During the course of petitioners' marriage, David was at various times employed as a stockbroker. Also at various times he began a company called Espuma dealing with polyurethane, began a real estate and/or investment company called Wiksell Ginzmer, sold encyclopedias, was a real estate salesman, repossessed water softeners, was a real estate investment adviser, and was an officer and vice president for investments of Comstock Financial Services, Inc. (Comstock Financial). In 1962 he was convicted of perjury. In 1973 he was charged with the criminal offense of writing bad checks. In 1980 he pleaded guilty and was imprisoned for selling unregistered securities in the Bubble-Up soft drink company. On January 13, 1988, he pleaded guilty to various criminal counts of fraud involving the sale of unregistered securities related to his participation in a fraudulent investment scheme involving Comstock Financial.
During 1984 and 1985, Margaret simultaneously maintained checking accounts at Security Pacific National Bank and Santa Clarita Bank. David had no signature authority over these accounts. With the exception of the times David was imprisoned, either he or Margaret retrieved the family mail from the mail box, but generally, only the respective addressee opened the envelopes.
During the years in issue Margaret paid all household expenses. David maintained a business checking account under the name of Hitech Recovery System, Inc. (Hitech), and periodically gave Margaret money to put into her separate checking accounts. In each instance, David issued a Hitech check made payable to "Margaret Wiksell", which she then deposited into one of the checking accounts she maintained at Security Pacific National Bank and Santa Clarita Bank.
Petitioners' 1984 and 1985 Federal income tax returns were prepared by professional accountants. Their 1984 return was signed by Margaret and David on June 16, 1987, and filed on June 22, 1987. Their 1985 return was signed by Margaret and David on November 9, 1987, and filed on November 12, 1987. The record contains no explanation for the late filings, nor facts surrounding the preparation of the returns by the accountants. No extension of time to file either the 1984 or 1985 return was secured.
Petitioners' 1984 Federal income tax return was filed with the Internal Revenue Service while David was in county jail. The record does not disclose the circumstances under which the 1985 return was signed or filed.
David never threatened petitioner with physical harm or separation from her children if she refused to sign any income tax return.
Sometime in 1982 or 1983 David told Margaret about starting Hitech. He told her that the business of the company was to be the extraction of oil from old oil wells. Hitech's Articles of Incorporation were filed with the California Secretary of State on February 18, 1983, and Margaret was designated as an officer and director. On March 25, 1985, Margaret signed as Secretary of Hitech on a document filed with the California Division of Oil & Gas.
Hitech issued no stock certificates, kept no minutes of stockholders or directors meetings, maintained no business address, kept no books and records, and filed no income tax returns. David was at all times the controlling person, director and chief executive officer of Hitech. Sometime before or during 1985 David took Margaret to see an oil field purportedly operated by Hitech. David ran Hitech out of the Wiksells' residence but nobody came to the house to transact business. During 1985 Margaret wrote checks on her personal checking account to pay for business supplies for David.
From January 1984, through November 1984, Margaret received 23 Hitech checks totaling $54,500. From January 1985, through October 1985, Margaret received 15 Hitech checks totaling $140,500.
Sometime before the spring of 1984 David went to work for Comstock Financial as a real estate investment adviser. From the spring of 1984 through the fall of 1985, David was employed by Comstock Financial as a corporate officer and Vice President of Investments. During the spring of 1984 David told Margaret that Comstock Financial was investing in Hitech. During 1984 and 1985 David and Margaret maintained an ongoing social relationship with Roy L. Comstock (Comstock), the President of Comstock Financial, and his wife, attended social gatherings with the Comstocks and other company employees, and attended company functions at restaurants, the Comstocks' home and the Comstock Financial business offices. Based on her attendance at the gatherings in the offices of Comstock Financial, Margaret concluded from the ambiance of the offices that Comstock Financial was doing very well.
During 1984 and 1985 Margaret knew that David had the use of a Comstock Financial credit card for business purposes. During 1984 and 1985 Margaret knew that David frequently used a Comstock Financial limousine to take Margaret, the Wiksell children, and business associates to social events.
Sometime between the spring of 1984 and the fall of 1985 Margaret accompanied David on a trip to Hawaii that was financed by Comstock Financial for its officers as a reward for business they had done.
During the years in issue, Margaret heard the term "managed investment account" but didn't know what it meant although she and David talked about it. Margaret saw Comstock Financial and Managed Investment Account brochures and observed that the brochures referred to David's 20 years of investment experience, a fact which Margaret knew was untrue.
In October, 1985, David told Margaret that the Securities and Exchange Commission (SEC) had recently issued a temporary restraining order against Wiksell and others to prevent them from engaging in the solicitation of investment funds. At or about the time of this occurrence, Margaret knew that on November 5, 1985, David's deposition was taken by the SEC, and David told her that his testimony involved things that had gone on at Comstock Financial.
David moved his business furniture and belongings out of the Comstock offices and into the family room of the Wiksell residence in the fall of 1985. A newspaper article, including David's photograph, appeared in the Los Angeles Times on March 3, 1986, reporting in detail a scam perpetrated by Comstock, Abraham Boldt and David wherein the sum of at least $2 million, fraudulently obtained from unsuspecting investors of Comstock Financial, was diverted to Hitech, David's oil company. Margaret read the newspaper article on or about March 3, 1986, the date of its publication.
In January or February, 1987, David was arrested by law enforcement authorities and charged with fraud in connection with the Comstock/Wiksell scam reported in the...
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Wiksell v. C.I.R.
...the deficiency and, following a trial at which only Margaret attended, the tax court denied both taxpayers relief. Wiksell v. Commissioner, 67 T.C.M. 2360 (1994). This timely appeal followed and concerns only Margaret Wiksell ("Appellant") in which she challenges the tax court's determinati......