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Remedial math

— San Diego Unified school board chairman Luis Acle, elected this past November, has lost a round against Uncle Sam in U.S. Tax Court. According to an opinion dated June 23 of last year, Acle, representing himself, took the government to court after the IRS said he owed back taxes of $40,818, along with an "accuracy-related penalty" of $7683.20. "Petitioner filed a Federal income tax return for taxable year 1998 with the filing status of head of household. Petitioner reported $300 of interest income, a $6760 business loss, and a $62,297 loss from rental activities, for an adjusted gross income of negative $68,757," according to the decision. Acle "also claimed dependency exemption deductions for two daughters and itemized deductions of $25,288 for mortgage interest and real estate taxes, resulting in a taxable income of negative $102,145, and zero tax liability." The decision goes on to describe seven rental properties, three in San Diego and the others in Washington, D.C., that Acle owned and were managed by others, on which he claimed a loss of $62,297, $59,000 of which was later disallowed by the IRS. "Although petitioner disputes the disallowance of the losses, he has made no arguments with respect to this issue, and at trial he stated that this issue 'seems to be a matter of law.' "

Then there was the matter of allegedly underreported income from Acle's clients: "PSEG Global was interested in building and operating a power plant in San Luis, Mexico. During 1998, petitioner assisted PSEG Global by performing various tasks including negotiating with the Mexican government, acting as a conduit in obtaining the proper certifications and permits that are required in Mexico, and engaging in other business negotiations." Acle's monthly invoices, the court said, "indicate that they are from 'Luis Acle, Occidental Utilities,' and the total amount billed by petitioner in 1998 was $160,310. Of this amount, $140,763 was for services petitioner rendered and $19,548 was for expenses he incurred." Acle argued that many of the payments in dispute consisted of reimbursements, not income, but the court didn't buy it: "Petitioner has presented no credible evidence that any of the amounts deposited into his bank accounts were reimbursements for expenses incurred on behalf of San Luis Tank or any other entity or individual. The only evidence to this effect was petitioner's own self-serving, uncorroborated testimony, which we do not find to be credible: At more than one point in his testimony, petitioner stated that he could not recall the purpose of individual withdrawals or deposits noted on his bank account statements."

Addressing Acle's claim of a negative taxable income of $102,145, the court concluded: "Petitioner has not explained how he would have been able to pay the disproportionately large amount of expenses shown on his return in comparison to the gross income that he reported, while at the same time maintaining a standard of living for himself and for his two daughters, whom he claimed as dependents." The opinion concluded: "Despite being involved in transactions resulting in bank deposits of over $325,000, petitioner testified that 'I also am mindful of the fact that there's probably a valid criticism that could be made of me because I do not keep records that are precise, that can be added up and totaled.' " Interviewed this week, Acle said the IRS ruling was unfair and misinformed. "I'm not going to just roll over and play dead." He added he was "going to go to an expert and get some advice" on what, if anything, he could do next.

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Big tabs San Diego city councilman Michael Zucchet, under indictment in connection with the Cheetahs strip-club bribery scandal, has paid $918,000 for a house on Adair Street in Point Loma. The deal closed on December 15 of last year, about five months after Zucchet and wife Teresa sold their previous residence on Yonge Street, also in Point Loma, on July 23 for $755,000. He purchased that house in August 2001 for $446,000. Zucchet financed his latest domicile with a $575,000 mortgage from CitiMortgage, Inc., records show. As of the end of 2004, according to his end-of-year campaign filing, the councilman also owed about $122,000 to crack criminal defense attorney Jerry Coughlan. Zucchet is expected to pay off most if not all of that debt using contributions to a new fund -- established under recent city law -- that will allow him to collect fresh cash from the same set of lobbyists and other special interests who have already reached their previous $250 limit. Zucchet is joined by fellow Cheetahs defendant Ralph Inzunza, along with Councilwoman Donna Frye and Mayor Dick Murphy, in raising money for their "legal defense." Both Frye and Murphy need the cash to pay off their rapidly multiplying lawyer bills from their tussle over who is really mayor. According to a recent pitch letter from Frye, "Because there are three lawsuits to defend, we may accept $250 per individual per lawsuit, for a maximum of $750 per person." In a new twist, donors are required to fill out a form disclosing whether they have "a matter pending before a governmental official or employee who is a City Official." The letter concludes with a quote from the late Eleanor Roosevelt: "It's better to light a candle than to curse the darkness." Frye also offers prospective donors the opportunity to contribute to her defense fund via her campaign website, an option that Murphy so far hasn't adopted.

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— San Diego Unified school board chairman Luis Acle, elected this past November, has lost a round against Uncle Sam in U.S. Tax Court. According to an opinion dated June 23 of last year, Acle, representing himself, took the government to court after the IRS said he owed back taxes of $40,818, along with an "accuracy-related penalty" of $7683.20. "Petitioner filed a Federal income tax return for taxable year 1998 with the filing status of head of household. Petitioner reported $300 of interest income, a $6760 business loss, and a $62,297 loss from rental activities, for an adjusted gross income of negative $68,757," according to the decision. Acle "also claimed dependency exemption deductions for two daughters and itemized deductions of $25,288 for mortgage interest and real estate taxes, resulting in a taxable income of negative $102,145, and zero tax liability." The decision goes on to describe seven rental properties, three in San Diego and the others in Washington, D.C., that Acle owned and were managed by others, on which he claimed a loss of $62,297, $59,000 of which was later disallowed by the IRS. "Although petitioner disputes the disallowance of the losses, he has made no arguments with respect to this issue, and at trial he stated that this issue 'seems to be a matter of law.' "

Then there was the matter of allegedly underreported income from Acle's clients: "PSEG Global was interested in building and operating a power plant in San Luis, Mexico. During 1998, petitioner assisted PSEG Global by performing various tasks including negotiating with the Mexican government, acting as a conduit in obtaining the proper certifications and permits that are required in Mexico, and engaging in other business negotiations." Acle's monthly invoices, the court said, "indicate that they are from 'Luis Acle, Occidental Utilities,' and the total amount billed by petitioner in 1998 was $160,310. Of this amount, $140,763 was for services petitioner rendered and $19,548 was for expenses he incurred." Acle argued that many of the payments in dispute consisted of reimbursements, not income, but the court didn't buy it: "Petitioner has presented no credible evidence that any of the amounts deposited into his bank accounts were reimbursements for expenses incurred on behalf of San Luis Tank or any other entity or individual. The only evidence to this effect was petitioner's own self-serving, uncorroborated testimony, which we do not find to be credible: At more than one point in his testimony, petitioner stated that he could not recall the purpose of individual withdrawals or deposits noted on his bank account statements."

Addressing Acle's claim of a negative taxable income of $102,145, the court concluded: "Petitioner has not explained how he would have been able to pay the disproportionately large amount of expenses shown on his return in comparison to the gross income that he reported, while at the same time maintaining a standard of living for himself and for his two daughters, whom he claimed as dependents." The opinion concluded: "Despite being involved in transactions resulting in bank deposits of over $325,000, petitioner testified that 'I also am mindful of the fact that there's probably a valid criticism that could be made of me because I do not keep records that are precise, that can be added up and totaled.' " Interviewed this week, Acle said the IRS ruling was unfair and misinformed. "I'm not going to just roll over and play dead." He added he was "going to go to an expert and get some advice" on what, if anything, he could do next.

Sponsored
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Big tabs San Diego city councilman Michael Zucchet, under indictment in connection with the Cheetahs strip-club bribery scandal, has paid $918,000 for a house on Adair Street in Point Loma. The deal closed on December 15 of last year, about five months after Zucchet and wife Teresa sold their previous residence on Yonge Street, also in Point Loma, on July 23 for $755,000. He purchased that house in August 2001 for $446,000. Zucchet financed his latest domicile with a $575,000 mortgage from CitiMortgage, Inc., records show. As of the end of 2004, according to his end-of-year campaign filing, the councilman also owed about $122,000 to crack criminal defense attorney Jerry Coughlan. Zucchet is expected to pay off most if not all of that debt using contributions to a new fund -- established under recent city law -- that will allow him to collect fresh cash from the same set of lobbyists and other special interests who have already reached their previous $250 limit. Zucchet is joined by fellow Cheetahs defendant Ralph Inzunza, along with Councilwoman Donna Frye and Mayor Dick Murphy, in raising money for their "legal defense." Both Frye and Murphy need the cash to pay off their rapidly multiplying lawyer bills from their tussle over who is really mayor. According to a recent pitch letter from Frye, "Because there are three lawsuits to defend, we may accept $250 per individual per lawsuit, for a maximum of $750 per person." In a new twist, donors are required to fill out a form disclosing whether they have "a matter pending before a governmental official or employee who is a City Official." The letter concludes with a quote from the late Eleanor Roosevelt: "It's better to light a candle than to curse the darkness." Frye also offers prospective donors the opportunity to contribute to her defense fund via her campaign website, an option that Murphy so far hasn't adopted.

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