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allowed INI any deduction for the bonus if he had not seen the
minutes and the canceled check. Becker issued an examination
report that disallowed half of the $100,000 deduction INI claimed
for the bonus payable to Burke.
Appeal of the Examination Report
INI protested Becker's findings. An Appeals conference was
held on March 5, 1987. The Appeals officer was William O’Meara
(O’Meara). To support the deduction for an accrued bonus of
$100,000, petitioner and Cutshall showed O’Meara a document
entitled “Agreement for Payment of Debts and Distribution of
Estate” (Heirs’ Agreement), a letter dated June 2, 1987, and
several canceled checks.
Petitioner drafted the Heirs’ Agreement for the distribution
of Burke's estate. There are three different versions of the
agreement (Heirs I, Heirs II, and Heirs III). Paragraph 1.b. of
Heirs I reads:
Receivables from and interest in INI Builders.
Inc. At the time of the death of Edward A. Burke,
amounts owed by INI Builders, Inc. to him and the value
of his stock, pursuant to a buy-sell agreement, totaled
$150,000. The personal representative has collected
$170,242 [sic] of this amount, the personal
representative has agreed after all parties have signed
this agreement to accept, and an additional $50,000 is
to be collected when the City of Shaktoolik makes
another payment on the contract with INI Builders, and
a promissory note from A. Lee Petersen in the amount of
$30,757.51, with 14% interest per annum, payable in
full within two years, in full settlement of amounts
owed by INI Builders, Inc. to Edward A. Burke and for
the stock of Edward A. Burke in the corporation.
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