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incorporated herein by this reference. At the time of filing the
petition, petitioner resided at Clearwater, Florida.
1. Petitioner's Schedules C
In 1988, petitioner began operating a sole proprietorship
which offered drafting services under the name Keegan &
Associates (K & A). Petitioner managed K & A and performed any
necessary bookkeeping. Petitioner's cousin, Robert Gorges, and
their daughter, Windi Keegan (Windi), worked for K & A during the
taxable years in issue.3 Since petitioner had no drafting
experience, Mr. Gorges performed any required drafting services.
In addition, Mr. Gorges operated the business when petitioner was
away. Windi answered telephones and performed other
administrative duties.
Although petitioner did not pay Windi or Mr. Gorges a fixed
salary or weekly wage, they would from time to time take cash
from K & A. In addition, many of Mr. Gorges' and Windi's living
expenses were paid out of K & A's funds. Petitioner kept no
records of the amount of cash which K & A paid for services
rendered during the taxable years in issue.
On Schedules C of her returns for the taxable years 1994 and
1995, petitioner reported gross receipts, cost of goods sold, and
expenses related to K & A as follows:
1994 1995
3 Petitioner and Mr. Gorges have never been married.
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