Court treats corporate funds as personal income
Chernomordikov v. Commissioner, T.C. Memo. 2025-129 (Dec. 15, 2025)
Running corporate money like a personal checking account triggers income tax. Proving fraud for failure to file still requires clear evidence of intent.
Holding
The Tax Court held that Mark Chernomordikov had unreported taxable income for 2012 and 2013 from his personal use of ONY Sales funds and denied any cost-of-goods-sold reduction due to a lack of substantiation.
The Court rejected fraud penalties for failure to file but sustained nonfraud failure-to-file, failure-to-pay, and estimated tax penalties. The Court also enforced a stipulation allowing married-filing-jointly status for 2013.
Why It Matters
Control and personal use of corporate funds can create taxable income even without ownership.
Cash-heavy operations without records invite bank-deposit reconstructions.
Fraud penalties demand clear and convincing proof of intent. Poor compliance alone is not enough.
Stipulations bind. The IRS cannot back out post-trial without cause.
Timeline
2011: Step-father dies. Mark assumes control of ON…
