- 6 - Similar omissions occurred in 1985. In February 1985, petitioners failed to record six special deposits; in May 1985, petitioners failed to record eight special deposits. Petitioners employed Theodore W. Reed (Reed) to prepare their personal income tax returns and the store's employment tax returns for 1984, 1985, and 1986. Reed was paid $300 per year and was not expected to audit petitioners' books and records. Reed was provided only the Drug Topics book to use in preparing the returns. Reed did not receive the check stubs, Daily Cash Reports, cash register tapes, or bank statements. Although petitioners knew that income omitted from the Drug Topics book would not be reported on their tax return, petitioners did not inform Reed that all coupon redemption receipts and all credit card sales receipts were not reflected in the Drug Topics book. Reed was not aware that certain special deposits were not reflected in the Drug Topics book. The Internal Revenue Service (IRS) began an examination of petitioners in May 1987. During the course of the IRS examination, petitioners were questioned about their accounting practices, including their failure to report coupon rebates as income. Mr. Roose explained to the revenue agent that it was industry practice not to report coupon rebates as income and that he did not report the coupon rebates because he was trying to create a retirement fund.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011