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entries to management fees and to refund the withholding to
petitioner.
For 1983, petitioner received $60,000 from the Mid-Continent
corporations, which was not reported on petitioners' 1983 income
tax return. Petitioner, during 1983, received $21,000 in
management fees from the Mid-Continent corporations, which he
failed to report on petitioners' 1983 income tax return.
Petitioner did not advise Home of the management fees received
from the Mid-Continent corporations.
A criminal investigation of Cooper was begun in Illinois,
involving activity similar to that of the Mid-Continent
corporations, and he resigned from the corporations. Thereafter,
around August 2, 1983, the State of Indiana, where petitioner and
the corporations did business, issued a cease and desist order,
based on alleged securities violations, against the corporations,
prohibiting them from selling shares of stock. After the court
order, the Mid-Continent corporations were, for all practical
purposes, no longer operating.
Petitioner personally continued the business activity of the
Mid-Continent corporations after the cease and desist order.
Obligations of the Mid-Continent corporations were paid with
checks drawn on his S corporation's (Estate) checking account as
follows:
1983 1984
Helicopter $30,297.50 $8,172.17
Expense reimbursement
to Ballinger 2,680.50 ---
Payments to the Mid-Continent
corporations' customers --- 26,001.58
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