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engaged in since 1989. Mr. Boyer began to prepare amended tax
returns for Simco and John sometime prior to August of 1992.
During the period from 1989, when he began selling Simco’s
scrap metal, until 1992, John did not tell Neal, or anyone else
associated with Simco, about the scrap metal sales. Neal did not
become aware of the sales of scrap metal until August of 1992,
during one of Simco’s shareholders’ meetings. The meeting was
attended by Neal, John, and Mr. Boyer. At the meeting, either
John or Mr. Boyer brought up the issue of the scrap metal sales.
After Neal heard about the scrap metal sales at the meeting, he
contacted Simco’s comptroller, James Kissick, who was unaware of
the sales to that point. Thereafter, Simco decided that John
could keep all of the proceeds from the scrap metal sales.4 Neal
asked Mr. Boyer to adjust Simco’s books and file the amended
returns. John had been unable to locate the weight tickets
previously issued by Dix Scrap, so he obtained copies from Mr.
Brooks to ascertain the amounts received from the scrap metal
sales in order to permit the filing of the amended returns. Mr.
Boyer decided how to treat the proceeds from the scrap metal
sales on Simco’s tax returns.
Recording and Reporting the Income
4 As discussed infra, Simco treated some of the proceeds as
compensation paid to John and some of the proceeds as repayment
of part of a loan from John to Simco.
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