- 20 -
whatever information he requested. Mr. Raclaw was provided with
Forms 1099, bank statements, and deposit slips from the two
accounts into which Dr. Rao deposited income. There is no
allegation of any income's not being deposited into the two bank
accounts. Mr. Raclaw decided to calculate gross income by
totaling the Forms 1099 rather than preparing a cash receipts
journal. Though obviously in error--he missed substantial
amounts of income--Mr. Raclaw believes he reconciled total
deposits to total income. We find that Dr. Rao relied on Mr.
Raclaw to prepare his tax returns accurately and that he supplied
Mr. Raclaw with all the information necessary to properly compute
gross income.
Respondent argues that Dr. Rao misled his accountant by
telling him that he only received income from third-party payers,
such as insurance companies. Respondent is mistaken. When asked
by respondent's counsel "How did you go about determining the
income on the Schedule C's that you filed with the tax returns",
Mr. Raclaw answered:
I went over the 1099, all the 1099s that he received,
asked pertinent questions pertaining to other income,
if he [Dr. Rao] received any income from any other
sources, and the response was that he received most of
his income from insurance -- insurance providers and
the 1099s.
Mr. Raclaw did not testify that Dr. Rao told him that "all" or
"almost all" of his income came from insurance and Form 1099
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011