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resin for his business, Bordelon made monetary payments to Mr.
Goings during each taxable year at issue. In exchange for these
kickback payments, Mr. Goings, in his capacity as Allied's
distribution manager, made Allied's scrap resin available for
Bordelon to purchase. These kickback payments were in addition
to the price Bordelon paid Allied for the resin. Bordelon made
the following kickback payments to Mr. Goings:
Year Kickback
1985 $110,000
1986 139,000
1987 230,000
1988 492,000
1989 66,000
1990 10,000
Allied was unaware of Bordelon's payments to Mr. Goings and
expressly prohibited its employees from establishing such payment
arrangements with its customers.
Petitioner and Mr. Goings did not report any of the payments
Bordelon made to Mr. Goings on their original returns for any
taxable year at issue. They did, however, report $27,000 of the
$139,000 that Mr. Goings received from Bordelon in 1986 as gross
receipts on Bevway's corporate tax returns for taxable years 1986
and 1987.
Cheryl Millin (Millin) prepared the couple's joint returns
for 1985 through 1990. Millin also prepared income tax returns
for Bevway, Deep South, and Highland. Millin was unaware of
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