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1987 1988 1989
John Kenny Co.
Wages $34,876.64 $31,351.34 $31,200.00
Federal tax withheld 4,935.09 4,236.30 4,200.04
State tax withheld 811.42 732.90 803.14
Social Security
tax withheld 2,493.68 2,354.49 2,343.12
Douglas Water Co.
Wages 6,500.00 6,750.00 6,500.00
Federal tax withheld 542.00 540.00 520.00
State tax withheld 160.68 166.86 160.68
Social Security
tax withheld 464.62 506.98 488.06
After withholding for various taxes, Mr. Morris received
during 1987, 1988, and 1989, respectively, (1) net wages (a) from
John Kenny Company of $26,636.45, $24,027.65, and $23,853.70 and
(b) from Douglas Water Co. of $5,332.70, $5,536.16, and $5,331.26
and (2) total net wages from both of those companies of
$31,969.15, $29,563.81, and $29,184.96.
Petitioner relied on Mr. Morris to prepare the joint returns
for the years at issue, had confidence in his ability to prepare
those returns properly, and, as far as petitioner knew, Mr.
Morris never received any complaints about the returns that he
prepared for others.
Criminal Charges of Tax Evasion
Against Mr. Morris
On December 30, 1992, Mr. Morris pleaded guilty to two
counts of tax evasion under 26 U.S.C. section 7201 (1994) for not
reporting as income in the joint returns for 1987 and 1988
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