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monthly total of business receipts. Dr. Cole had access to the
day sheets and could review them at any time.
Ms. Hale assembled petitioner's daily receipts and gave them
to Dr. Cole to deposit each day. Dr. Cole or his wife deposited
the receipts. Ms. Hale made the deposits when Dr. Cole was on
vacation.
Petitioner's receipts for June, July, and August 1987 were
deposited in its accounts at Northwest Mutual Savings Bank or
Mellon Bank. Petitioner's receipts from September 1987 to May
1989 were deposited in its account at Marine Bank. Petitioner's
receipts totaled $1,240,547.69 in fiscal year 1987 and
$1,400,726.22 in fiscal year 1988.
Around December 1989, Dr. Cole asked Ms. Hale for the yearly
total and a monthly breakdown of petitioner's gross receipts for
fiscal year 1988. She told him that petitioner's gross receipts
for fiscal year 1988 were $1,376,401.27.
B. Petitioner's Tax Returns
Carl Lindblad (Mr. Lindblad) prepared petitioner's tax
returns since it was incorporated, including its 1987 and 1988
returns. Mr. Lindblad never saw petitioner's corporate books and
records.
Mr. Lindblad prepared petitioner's 1987 tax return on the
basis of a phone conversation with Dr. Cole and a handwritten
summary of petitioner's gross receipts and interest and a list of
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