- 10 -
and make up the reduction with an agreement to pay Burke a bonus
in an equivalent amount. Petitioner did not tell Thorpe that his
proposal to change the character of the payments would impose an
income tax burden on Burke’s estate. Thorpe told petitioner he
did not care what petitioner did, so long as the estate was not
adversely affected.
Virginia Cutshall (Cutshall) is an Alaska certified public
accountant who prepared INI's and petitioner's income tax returns
and petitioner’s amended returns for the years in issue. In
preparing INI's TYE 9/84 return, Cutshall used INI's general
ledger, corporate minutes, payroll records, and other information
provided by petitioner. Cutshall relied on either the corporate
minutes or the information received from petitioner in deciding
that INI could accrue a bonus payable to Burke. Prior to and at
the times of the preparation of petitioner’s original 1984 and
1986 income tax returns, petitioner did not inform Cutshall of
his efforts to reduce the purchase price of his obligation to buy
Burke’s stock and to make up the difference with INI bonus
payments, nor did he ask for her advice on the tax consequences
of the course of action he was trying to implement.
Thorpe did not understand the tax implications of the
reformation that petitioner had proposed. Thorpe is a sales
manager for an auto dealer. He has not completed high school,
nor does he have any tax training; he does not even balance his
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011