Dwight L. McKenna and Beverly S. McKenna - Page 6

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            amount of $441,662.05.  He knew that each of these checks was                               
            income to him.                                                                              
                  In 1987 and 1988 petitioner knew that he had an obligation                            
            to report all of his income on his Federal income tax returns,                              
            whether received by check or cash.                                                          
                  Petitioner knew that he would receive a Form 1099                                     
            representing income he received for services rendered to Medicare                           
            and Medicaid patients.  He knew that this information would be                              
            sent to the Internal Revenue Service.  He also knew that he was                             
            not going to receive Forms 1099 from about 98 percent of the                                
            attorneys who were issuing checks to him for payment of medical                             
            services to their clients.                                                                  
                  Petitioner made a copy of each check he received from an                              
            attorney in 1987 and 1988.  He would then add the checks each                               
            week and make a notation to himself.  He would keep a running                               
            total for the entire year.                                                                  
                  Although petitioner claimed that he kept a handwritten list                           
            of the amounts of the various checks he received in 1987 and                                
            1988, he never gave the list to Michael Bruno (Mr. Bruno), his                              
            certified public accountant.                                                                
                  Petitioner usually hand delivered his bill for medical                                
            services on behalf of certain patients to attorney Louis Gerdes                             
            (Mr. Gerdes).  This occurred during 1987 and 1988 when petitioner                           
            received 278 and 188 checks, respectively, from Mr. Gerdes.                                 






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