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Enterprises. White Enterprises often drew on the accrued fees or
was paid contemporaneously for the services it provided.
Prior to 1987, petitioner drew on the management fees
accrued to him only twice. On March 3, 1984, and April 23, 1984,
respectively, petitioner caused the partnership to pay him
accrued management fees in the amounts of $10,000 and $15,000.
Because the partnership paid petitioner $25,000 in 1984, he was
owed $190,000 in accrued management fees by the end of December
1986.
During 1987, the partnership paid petitioner the $190,000
outstanding balance of the management fees accrued pursuant to
the compensation arrangement. That sum was paid by five checks.
The checks were deposited into petitioner’s business checking
account with Indian Head Bank and Trust Co.
During 1987 and 1988, believing that it was required, Mr.
Davis and his assistant issued Forms 1099 to any noncorporate
recipient of payments from the partnership in 1987 of at least
$10 in interest or at least $600 for services. During 1987, the
partnership issued to petitioner two Forms 1099 for 1986: A Form
1099 in the amount of $460 for automobile-related fringe
benefits, and a Form 1099 in the amount of $12,000 for equipment
rental fees paid to petitioner. During 1988, the partnership
issued to petitioner Forms 1099 for the years 1984 and 1985 on
1987 Forms 1099 with the year changed to 1984 or 1985, as
appropriate. The Form 1099 for 1984 in the amount of $42,201.79,
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