- 5 -
did not provide, and Mr. Crim never requested, copies of the
checks deposited to and drawn on the corporate account. Once a
return was prepared, Mr. Crim would meet with the Gilchrists to
discuss the return and obtain their signatures.
In 1989, the Internal Revenue Service selected for audit
Door Control's 1986, 1987, and 1988 corporate returns. The audit
was assigned to Revenue Agent Jeff C. Caid. In the course of his
examination, Revenue Agent Caid reconciled deposit records for
Door Control's corporate checking account with Forms 1099
received by Door Control from some of its large clients. He
found that some of the income received by the corporation had not
been deposited in the corporate checking account. Revenue Agent
Caid suspected that corporate income had been diverted to the
Gilchrists' individual bank account, and he commenced an audit of
their 1986, 1987, and 1988 individual returns.
Revenue Agent Caid met with Mr. Gilchrist three times in
August and September of 1989. During the course of the
examination, he asked Mr. Gilchrist for the number and location
of the personal and corporate bank accounts in use during 1986,
1987, and 1988. Mr. Gilchrist told him that they kept corporate
funds separate from personal funds and that they had only one
personal account entitled the "D and S Farms Account". Revenue
Agent Caid discovered, however, that the Gilchrists had three,
rather than one, personal bank accounts.
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