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reflect petitioners’ experience and expertise, rather than the
posted rates. Occasionally, petitioners sent no bill because
they decided to provide gratuitous services. Actual charges to
M&M clients reflect that some clients were billed at a rate in
excess of and some less than M&M’s minimum rate.
During respondent’s examination of their 1989 tax years,
petitioners did not provide books, records, copies of M&M’s bills
to clients, or any other information from which petitioners’
clientele could be identified or respondent could verify
petitioners’ income for 1989. Respondent’s computers reflect
that M&M was shown as the preparer on more than 300 Federal tax
returns for the 1989 processing year. In addition, McDonald
filed 13 clients’ petitions with this Court during 1989.
Petitioners sought the protection of the Bankruptcy Code,
McDonald in December 1980 and Maynard in April 1981. To avoid
the possibility of attachment of their accounts receivable,
petitioners formed a California corporation, Gold Country
Financial, Inc. (Gold), to conduct a tax accounting business
concurrently with and at the same location as M&M. Gold also
provided petitioners with a means to obtain credit after their
bankruptcies because they were employees of Gold. Moreover,
Gold’s sole shareholder was shown as Terry Feil, a friend of
Maynard’s.
Corporate Federal income tax returns were filed for Gold’s
fiscal years ended July 31, 1989 and 1990. Gold’s income and
expenses were reported on the accrual method of tax accounting.
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