- 11 -
it was determined that the amount constituted part of the overall
recovery of the client in the case and was not reimbursable. The
office policy was for bodily injury settlement checks to be held
until they were signed by the client. Then the amounts were
deposited into the firm's client trust account, and a check was
issued to the client for the client's portion. At some point,
the amount due to the medical provider then was paid. This
policy was not followed with respect to the cashed checks at
issue in this case.
It was petitioner's policy not to cash insurance checks.
There were a few exceptions in 1988 and early 1989 where Mr. Yoon
was authorized to cash a check to pay a client who would have had
difficulty negotiating the firm's check to the client. Mr. Yoon
cashed such checks with the understanding that the balance would
be retained by Mr. Yoon as part of his compensation. It was
petitioner's understanding that even in the isolated instances in
which a check was authorized to be cashed, Mr. Yoon recorded the
cashed checks for the purpose of maintaining accurate books for
the firm. Petitioner believed that even if these amounts were
not reported in the firm's gross income, there was no change to
the firm's net income because any amount that inured to the
benefit of the firm was kept by Mr. Yoon as compensation.
Mr. Park prepared petitioner's Federal income tax returns
for 1988, 1989, and 1990. Mr. Hwang prepared petitioner's
Federal income tax return and amended return for 1991. Both Mr.
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