William O. Harrison - Page 11

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             accountants were surprised that the income was so high,                  
             approximately $160,000 more than the accountants had                     
             estimated.                                                               
                  In estimating petitioners' taxable income for 1988,                 
             petitioners' accountants also took into account the                      
             income from Mr. Harrison's interest in the cattle feeding                
             business, described above.  Petitioner, Ms. Cates, and                   
             Ms. Ruble all attempted to contact Mr. Gilmore prior to                  
             April 15, 1989, in order to obtain information about                     
             Mr. Harrison's income from the cattle feeding business for               
             1988, but they were unsuccessful.                                        
                  Petitioners' accountants estimated that Mr. Harrison                
             had realized a loss from this business for 1988.  This was               
             based upon the fact that losses had been realized in prior               
             years and upon a letter written by Mr. Gilmore to                        
             Mr. Harrison in August 1988.  In that letter, Mr. Gilmore                
             stated that the operations of the business during fall of                
             1987 and spring of 1988 had not gone well and that                       
             Mr. Harrison's letter of credit had been exhausted and he                
             needed to pay approximately $64,600 to replenish the letter              
             of credit.  Based upon that letter, petitioners and their                
             accountants believed that the operating results for 1988                 
             would show a loss.                                                       







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