Reginald Maurice Wise and Shannon Rae Wise - Page 10

                                        - 10 -                                         
          Also during WRI's fiscal year 1988, Wise and Eicher made cash                
          advances to WRI of $9,909 and $32,701, respectively.                         
          F.   WRI Losses                                                              
               WRI sustained losses from its operations during 1986, 1987,             
          1988, and 1989.  Wise and Eicher had each claimed that they had              
          $840,617 of cumulative losses from WRI as of July 31, 1987.  WRI             
          reported a loss of $784,160 for its fiscal year 1988.                        
          G.   Tax Returns                                                             
               1.   Hersco's 1988 Tax Return                                           
               Hersco reported a net long-term capital gain of $189,014 on             
          its 1988 partnership tax return.  Also on that return, Hersco                
          reported the following amount of ordinary income:                            
                    Item                                 Amount                        
               Other income                             $100,115                       
               Less                                                                    
               Guaranteed payment to Eicher             73,122                         
               Taxes                                    828                            
               Other deductions                         1,789                          
                         Ordinary income                $24,376                        
                    a.   Capital Gain                                                  
               Hersco reported net long-term capital gain from the 1984                
          sale of property from Hersco to WRI.  Yearend entries in the                 
          books and records of WRI and Hersco stated that there had been               
          payments of principal and interest from WRI to Hersco and                    
          simultaneous “loan backs” from Hersco to WRI.  No payments were              
          made.  No evidence was offered regarding the terms of these "loan            
          backs".                                                                      




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