James H. Leste and Stacy Leste, et al. - Page 11

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          received constructive dividends from FAMC in the amounts of                 
          $67,500, $55,000, and $32,500 for the calendar years 1989, 1990,            
          and 1991, respectively.                                                     


                                                                                     


               During 1989 and 1990, Leste received bonuses from FAMC in the          
          amounts of $29,431 and $130,000, respectively.  The entire amount           
          of the 1989 bonus and one-half of the 1990 bonus were incorrectly           
          reported as self-employment income on Leste's individual income tax         
          returns for the respective years.  Leste concedes that this error           
          resulted in the overstatement of deductions for contributions to            
          his pension plan, and that he is liable for excise taxes on the             
          overstated amounts.                                                         
               During 1990 and 1991, Moore received bonuses from FAMC in the          
          amounts of $130,000 and $21,970, respectively.  One-half of the             
          1990 bonus and the entire amount of the 1991 bonus were not                 
          reported on Moore's original income tax returns for the respective          
          years. After respondent's examination of FAMC's returns had                 
          commenced, Moore filed an amended income tax return for 1990                
          reporting the additional $65,000 in bonus income for that year.             
          Moore also has conceded that he is liable for the bonus income he           
          failed to report on his 1991 return.                                        
               On its income tax return for the fiscal year ending October            
          31, 1991, FAMC claimed $202,525 for cost of goods sold. Respondent          
          disallowed this amount in full, and FAMC concedes the disallowance.         



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