- 28 -
percent of his clientele. Powers spent 8 to 12 days a year
actually at petitioner's place of business. As petitioner's
accountant, Powers' duties involved preparing semi-annual
financial statements and annual tax returns for petitioner,
hiring and training petitioner's accounting personnel, and
solving any accounting problems that petitioner may incur
throughout the year. Powers claimed that to his understanding, a
mechanical contractor is a service provider. Moreover, Powers
testified that petitioner did not have inventory, because it
acted merely as an agent when it ordered materials pursuant to a
particular contract.
There is nothing in the record to indicate that petitioner
withheld any relevant information from Powers. We note that
Powers testified that he did not take a physical inventory of
petitioner's warehouse. That fact alone, however, does not
establish that petitioner failed to provide Powers with all the
necessary and relevant information he needed to prepare
petitioner's tax returns. Powers spent time at petitioner's
offices, he actually viewed petitioner's warehouse, and he
admitted that it was ultimately his decision, and not
petitioner's, to define what inventory is.
Thus, given the facts discussed herein we find that
petitioner relied in good faith on the advice of its accountant
in filing its returns on the cash method. Accordingly, we hold
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011