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Mr. Sharer was a certified public accountant who, beginning
in 1980, operated an accounting practice, Sharer Accountancy
(business), as a sole proprietorship. In 1986, petitioner began
helping her husband with his business. Petitioner had authority
to write checks on the accounts of the business. During 1986,
1987, and 1988, petitioner and Mr. Sharer wrote checks to
petitioner on the business accounts which were annotated as
"spousal wages".
During 1986, 1987, and 1988, petitioner and Mr. Sharer also
shared a joint personal checking account, into which petitioner
deposited her "spousal wages", and Mr. Sharer deposited his draw
from the business. Petitioner also shared a joint checking
account with her mother, Mary McDonald.
After Mr. Sharer's death, petitioner worked as an
independent contractor for the Maynard & McDonald partnership
(M & M) and Gold Country Financial, Inc. (Gold Country). M & M
and Gold Country were in the business of preparing tax returns,
providing assistance to clients in tax-related matters, and
providing accounting services. Petitioner's father, Bill
McDonald, was a partner in M & M. Respondent's Information
Returns Master File Transcript did not show that either M & M or
Gold Country filed Forms 1099 or W-2 with the Internal Revenue
Service indicating wages or other compensation paid to
petitioner. However, petitioner reported Schedule C gross
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