                        T.C. Memo. 2003-243



                       UNITED STATES TAX COURT



                  JAMES E. WELLS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19467-97.              Filed August 13, 2003.



     James E. Wells, pro se.

     Jason W. Anderson, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     CHIECHI, Judge:    Respondent determined the following defi-

ciencies in, additions under section 6653(b)1 to, and fraud

penalty under section 6663(a) on, petitioner’s Federal income tax



     1
      All section references are to the Internal Revenue Code in
effect for the years at issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
                               - 2 -

(tax):

                                                          Fraud
                              Additions to Tax           Penalty
                     Sec.          Sec.        Sec.      Sec.
Year Deficiency 6653(b)(1)(A) 6653(b)(1)(B) 6653(b)(1) 6663(a)
                                     1
1987 $24,505       $18,379                      --        --
1988 $11,450          --            --        $8,588      --
1989 $13,257          --            --          --      $9,943
    1
      50% of interest due on $24,505

     The only issue remaining for decision2 is whether petitioner

is entitled to a credit for the $65,000 that he forfeited to the

United States.   We hold that he is not.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

     At the time petitioner filed the petition in this case, he

resided in Rochester, Minnesota.

     On a date not disclosed by the record, the United States

Attorney for the Northern District of Illinois (U.S. Attorney)

instituted a criminal proceeding against petitioner (petitioner’s

criminal proceeding) and charged him in a document entitled

“SUPERSEDING INFORMATION” (superseding information) with four

counts (four counts) alleging violations of 18 U.S.C. sec. 666

(bribery), 18 U.S.C. sec. 844(i) (arson), 18 U.S.C. sec. 1344

(bank fraud) and 26 U.S.C. sec. 7201 (income tax evasion).    The

U.S. Attorney further charged petitioner in the superseding


     2
      Petitioner concedes all the determinations in the notice of
deficiency.
                              - 3 -

information as follows:

          1.   From on or about April 8, 1991 through April
     11, 1991, at Chicago * * * defendant JAMES E. WELLS
     knowingly and intentionally, for the purpose of evading
     the filing with the Internal Revenue Service of a
     Currency Transaction Report (IRS Form 4789), as re-
     quired by Title 31, United States Code, Section
     5313(a), structured and assisted in structuring, and
     attempted to structure and assist in the structuring,
     of a transaction with domestic financial institutions,
     namely, by cashing twenty simultaneously-purchased and
     sequentially-numbered cashier’s checks, each drawn on
     Bell Federal Savings in the amount of $2,000 and pay-
     able to defendant JAMES E. WELLS, at the following
     domestic financial institutions in the following
     amounts on or about the dates cited:

      Date        Amount              Financial Institution
    4/8/91       $10,000   New Rush Street Currency Exchange
    4/9/91        10,000   New Rush Street Currency Exchange
    4/9/91         4,000   New Milwaukee-Ogden Currency Exchange
    4/9/91         4,000   Columbia Currency Exchange
    4/10/91        2,000   New Milwaukee-Ogden Currency Exchange
    4/11/91       10,000   New Milwaukee-Ogden Currency Exchange;

          In violation of Title 31, United States Code,
     Sections 5324(3) and 5322(a).

          2.   From on or about April 12, 1991 through April
     19, 1991, at Chicago * * * defendant JAMES E. WELLS
     knowingly and intentionally, for the purpose of evading
     the filing with the Internal Revenue Service of a
     Currency Transaction Report (IRS Form 4789), as re-
     quired by Title 31, United States Code, Section
     5313(a), structured and assisted in structuring, and
     attempted to structure and assist in the structuring,
     of a transaction with domestic financial institutions,
     namely, by cashing five simultaneously-purchased and
     sequentially-numbered cashier’s checks, each drawn on
     National Security Bank in the amount of $5,000 and
     payable to defendant JAMES E. WELLS, at the following
     domestic financial institutions in the following
                              - 4 -

     amounts on or about the dates cited:

     Date        Amount               Financial Institution
   4/12/91       $5,000   National Security Bank
   4/16/91       10,000   New Milwaukee-Ogden Currency Exchange
   4/19/91       10,000   New Milwaukee-Ogden Currency Exchange;

          In violation of Title 31, United States Code,
     Sections 5324(3) and 5322(a).

          3.   From on or about April 8, 1991 to on or about
     April 19, 1991, defendant JAMES E. WELLS engaged in the
     above-described conduct in violation of Title 31,
     United States Code, Section 5324(3), thereby subjecting
     to forfeiture to the United States, pursuant to Title
     18, United States Code, Section 982(a)(1) and Title 21,
     United States Code, Section 853(a)(2) and (p)(5), the
     following property and interests:

          All of the defendant’s property used and intended
     to be used in any manner or part to commit or to
     facilitate the commission of defendant’s violations of
     Title 31, United States Code, Section 5324(3).

          Specifically, this includes the following:
     $65,000 of the approximately $105,145 in cash recovered
     from personal belongings of defendant JAMES E. WELLS
     at the time of his arrest by officers of the Sarasota
     Police Department on or about November 16, 1991.

          In violation of Title 21, United States Code,
     Section 853(a)(2) and (p)(5).

     On April 22, 1993, petitioner and petitioner’s attorney

James I. Marcus (Mr. Marcus) entered into a plea agreement

(petitioner’s plea agreement) with the U.S. Attorney.    Peti-

tioner’s plea agreement stated in pertinent part:

          This Plea Agreement is entirely voluntary and
     represents the entire agreement between the United
     States Attorney and defendant regarding defendant’s
     criminal liability in * * * [petitioner’s criminal
                          - 5 -

proceeding].

     This Plea Agreement concerns criminal liability
only, and nothing herein shall limit or in any way
waive or release any administrative or judicial civil
claim, demand or cause of action, whatsoever, of the
United States or its agencies. Moreover, this Plea
Agreement is limited to the United States Attorney’s
Office for the Northern District of Illinois and cannot
bind any other federal, state or local prosecuting,
administrative or regulatory authorities except as
expressly set forth in this Plea Agreement.

     *         *      *       *       *       *       *

     4.   Defendant will enter a voluntary plea of
guilty to the superseding information in this case.

     5.   Defendant will plead guilty because he is in
fact guilty of the charges contained in the superseding
information. In pleading guilty, defendant admits the
following facts and that those facts establish his
guilt beyond a reasonable doubt * * *

     *         *      *       *       *       *       *

     15. Nothing in this Plea Agreement shall limit
the Internal Revenue Service in its collection of any
taxes, interest or penalties from defendant, or defen-
dant’s partnership or corporations. Defendant under-
stands that the amount of tax as calculated by the
Internal Revenue Service may exceed the amount of tax
due as calculated for the criminal case.

     *         *      *       *       *       *       *

     22. Defendant acknowledges that the property
identified in the forfeiture allegation contained in
the information in this case constitutes substitute
assets for the structured cash transactions described
in that forfeiture allegation. Defendant further
agrees to the entry of an order forfeiting any interest
defendant may hold in the property identified in the
forfeiture allegation of the information in this case.

     *         *      *       *       *       *       *

     25.   Defendant and his attorney acknowledge that
                                - 6 -

     no threats, promises, or representations have been
     made, nor agreements reached, other than those set
     forth in this Plea Agreement, to cause defendant to
     plead guilty.

     On June 24, 1994, the United States District Court for the

Northern District of Illinois, Eastern Division, entered an order

and judgment (U.S. District Court judgment) in petitioner’s

criminal proceeding.    The U.S. District Court judgment in peti-

tioner’s criminal proceeding adjudged petitioner guilty of the

four counts alleged in the superseding information and also

ordered petitioner “to forfeit the following property to the

United States:    The amount of $65,000 to the United States”.

     On June 18, 1997, respondent issued to petitioner a notice

of deficiency (notice) with respect to his taxable years 1987,

1988, and 1989.    In that notice, respondent allowed no credit

against the deficiencies, additions to tax, and penalty that

respondent determined for those years (amounts due for the years

at issue) for the $65,000 forfeited to the United States pursuant

to the U.S. District Court judgment in petitioner’s criminal

proceeding.

                               OPINION

     Although not alleged in the petition, petitioner took the

position at trial and takes the position on brief that he is

entitled to a $65,000 credit (petitioner’s claimed credit)

against the amounts due for the years at issue.    In support of

his position, petitioner relies on his testimony at trial that at
                               - 7 -

the time he signed petitioner’s plea agreement he instructed his

attorney Mr. Marcus to enter into an agreement with the U.S.

Attorney to have petitioner’s claimed credit applied against the

amounts due for the years at issue.    On brief, petitioner con-

tends for the first time that he would not have entered into

petitioner’s plea agreement without having had an agreement with

the U.S. Attorney to apply petitioner’s claimed credit against

the amounts due for the years at issue.

     We are unwilling to rely on petitioner’s testimony about an

agreement with the U.S. Attorney to apply petitioner’s claimed

credit against the amounts due for the years at issue.    Peti-

tioner’s testimony is contradicted by petitioner’s plea agreement

and the U.S. District Court judgment in petitioner’s criminal

proceeding.   On the record before us, we find that petitioner is

not entitled to petitioner’s claimed credit.

     We have considered all of the contentions and arguments of

the parties that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.3


     3
      Respondent argues that, even if the Court were to find that
there was an agreement with the U.S. Attorney to have
petitioner’s claimed credit applied against the amounts due for
the years at issue, no such credit should be permitted. That is
because, according to respondent, a line of cases including Tank
Truck Rentals, Inc. v. Commissioner, 356 U.S. 30 (1958), King v.
United States, 152 F.3d 1200 (9th Cir. 1998), Wood v. United
States, 863 F.2d 417 (5th Cir. 1989), and United States v.
Algemene Kunstzijde Unie, N.V., 226 F.2d 115 (4th Cir. 1955), has
held that allowing that type of credit would be against public
                                                   (continued...)
                             - 8 -

    To reflect the foregoing and the concessions of petitioner,



                                     Decision will be entered for

                             respondent.




    3
      (...continued)
policy. We shall not address respondent’s argument in light of
our finding that petitioner did not have an agreement with the
U.S. Attorney to apply petitioner’s claimed credit against the
amounts due for the years at issue.
