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compensation arrangement for petitioner constituted anything
other than nonemployee compensation. During 1990, Mr. Beane
concluded that the management fees accrued to petitioner
personally and that they constituted guaranteed payments. The
partnership did not issue corrective Forms 1099 or Schedules K-1
concerning the $190,000 of management fees accrued and paid to
petitioner in 1987 pursuant to the compensation arrangement.
Petitioner employs bookkeepers to keep track of his receipts
and expenditures for purposes of computing his personal income
taxes. The bookkeepers recorded petitioner’s receipts and
expenditures using a “one-write sheet” bookkeeping system.
Receipts also were recorded on bank deposit slips. Petitioner’s
bookkeepers recorded all of petitioner’s receipts and
expenditures in a checkbook for petitioner’s business checking
account with Indian Head Bank and Trust Co. and assembled the
information returns petitioner received from various entities,
including the partnership. Deposits in petitioner’s account with
Indian Head Bank and Trust Co. entered as receipts in 1987 in
petitioner’s general ledger totaled $1,500,000. Amounts entered
in petitioner’s general ledger as receipts from the partnership
in that year exceeded $190,000 because petitioner received other
distributions from the partnership in addition to that amount.
During the years 1983 through 1987, petitioner deducted his
expenses on Schedules C in the taxable year that they were paid.
During the years 1983 through 1987, petitioner included all
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