Bill McDonald - Page 6

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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                
               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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