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petitioner listed expenses in categories such as travel,
telephone, and office rent. For income, he listed three sources:
Commissions earned by Susanna, management income he earned, and
miscellaneous income. In 1990, Susanna earned commissions from
four transactions, and petitioners reported the income on their
Schedules C. Sand Hill received these commission checks
generally through escrow accounts, and petitioners deposited the
checks into various bank accounts, including the Bank of America
account.
Petitioner did not include Susanna's consultation fee as
income on the one-page summary of Sand Hill's income and expenses
prepared for the Paus' accountant, even though he knew that she
had received $150,000 as a consultation fee from Meiyan.
Moreover, the same day Susanna deposited the check for $150,000
into the Bank of America account, petitioner wrote a check on
that account payable to Susanna for the same amount, which she
deposited into the BNP account. Another check for $50,000 was
also debited on March 20, 1990. Prior to the deposit of the
$150,000, the account contained a balance of $155,874.47. In
completing Sand Hill's 1990 income and expense summary for
petitioners' accountant, petitioner was aware of but
intentionally failed to include the $840,000 from Sanrio.
Petitioners did not tell their accountant of either omission
from their summary. Neither the $150,000 fee nor the $840,000
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