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determined that the average 1989 return preparation fee was $482
for an individual return, $1,400 for a corporate return, and
$1,250 for a partnership return. In his reconstruction, Pease
also accounted for the fact that some returns were prepared
gratuitously. Pease determined total 1989 fees of $192,201.
Based on information provided by petitioners during trial
preparation, respondent conceded on brief that total combined
reconstructed 1989 fees were $185,128.
To determine M&M’s income for 1989, deposits into Gold’s
Merchants Bank account for the first 7 months were eliminated in
the total amount of $33,388 because Gold had reported that amount
for its taxable year ended July 31, 1989. No adjustment for
Merchants Bank deposits was made for the last 5 months of 1989
because petitioners did not provide income and accounts
receivable records for that period. There was no consistency
about which entity prepared a particular client’s return (it
would indiscriminately vary between M&M and Gold from year to
year).
Petitioners, in their respective 1989 income tax returns,
did not report the $250 monthly payments for automobile expenses
received from Gold during 1989. Petitioners reduced the amount
of the Merchants Bank deposits reported in Gold’s income by the
amount petitioners paid for automobile expenses. Petitioners did
not submit any documentation to Gold in support of their
automobile mileage or expenses for 1989. Maynard conceded that
the 1989 automobile reimbursement received from Gold was income
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