Bruce A. and Kathy J. Krist - Page 5




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          located near his house, petitioner had customers who would come             
          to his house.  The management would bring the locks over to be              
          rekeyed whenever a tenant moved out.  If someone lost a key,                
          petitioner would make it at his house.  Two other car dealer                
          clients would bring automobiles by his house for him to rekey.              
          Much of petitioner’s work was done onsite such as at a client's             
          house where a lockout occurred or at a car dealership.                      
          Petitioner kept some machines and equipment in his garage.                  
          Petitioner kept records of his daily sales and of his supplies in           
          a checkbook and in a business journal.  Petitioner did not place            
          his business journal in evidence.  Petitioner provided his                  
          customers with invoices, but he used the type that were                     
          duplicates, and, to get more for his money, he used both parts              
          for different jobs, essentially making 100 invoices out of what             
          should have been 50.  Therefore, he kept no copy of the invoices.           
          Petitioner kept some inventory on hand, but usually bought it               
          when needed.                                                                
               Petitioner's brother, Brett, did work for the locksmith                
          business in 1995.  However, petitioner did not file a Form 1099             
          reporting income he paid to his brother.  He claimed he did not             
          know what to file, and he figured it did not matter because his             
          brother was family.  Petitioner claimed he kept a ledger of how             
          much Brett was paid, but the ledger was not produced.  Respondent           
          calculated that in the check register about $3,600 was recorded             





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