- 6 -
Cooper to sign documents indicating that they each received a
total of $110,000 in reimbursed preincorporation expenses from
the Mid-Continent corporations. Petitioner, in the same
document, acknowledged a $100,000 account payable of Mid-
Continent Acquisition Corp. to petitioner. Home prepared the
1982 Federal income tax returns for the Mid-Continent
corporations and petitioners. The preincorporation expenses
reported by petitioners and the others were set up on the Mid-
Continent corporations' books as an intangible asset, which was
to be amortized over 60 months.
Home did the bookkeeping for Estate, and when petitioner
made a payment with business funds that could not be identified
as having a business purpose, no deduction for such amount was
claimed on the S corporation's return. For 1982 and 1983,
$108,000 and $121,000, respectively, fell into the nondeductible
category, and Home reflected the amounts as loans to shareholders
on financial records and tax returns for Estate. The total
amount of loans outstanding as of the end of Estate's 1983 year
was $229,000.
During August and September 1983, petitioner received a
$6,265.25 salary check from each of the two Mid-Continent
corporations. Withholding tax had been taken from the salary
checks, and the payments were recorded in the corporate payroll
journals. During November 1983, following a meeting between
petitioner and Roy, the bookkeeper was told to change the salary
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011