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$7,960,4 which was petitioners’ total tax liability for 1979.
The remaining balance of the unused credits, $5,942, was carried
forward to 1983. On their 1984 Federal income tax return,
petitioners claimed a net operating loss deduction of $492 as a
result of their investment in Whitman.
C. Kirk Clothier
Clothier is a certified public accountant (C.P.A.), and
holds a master’s degree in taxation. His accounting firm is
located in Seattle, Washington. He has practiced accounting
since 1971. Clothier was introduced to petitioner by
petitioner’s brother, who played volleyball with Clothier in
college. In 1973 or 1974, Clothier began assisting petitioners
with their personal income tax returns as well as the corporate
income tax returns and financial statements of Apex. Petitioner
and Apex continued to employ the services of Clothier until 1997,
when petitioner switched to a local accountant for the purpose of
convenience. In petitioner’s words: “every year it became more
difficult to get down * * * [to Seattle]” from Lake Stevens,
which is located 45 miles north of Seattle.
Clothier’s services to petitioners were not limited to the
preparation of their income tax returns. As Apex became more
4The discrepancy between the amount carried back to 1979,
$8,007, and the amount of the refund, $7,960, is due to the fact
that the carryback caused petitioners to lose a child care credit
of $47 for 1979.
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