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county issued Mr. Maloney two Forms 1099 stating that in 1984 it
paid him $445,516.48 and $6,942.35 and a "corrected" Form 1099
stating it paid him $432,000.13. Mr. Butler prepared Mr.
Maloney's general ledgers and 1984 tax return. On their return,
petitioners elected accrual as the method of accounting and
reported $409,625 of gross receipts.
In 1985, the county paid Mr. Maloney $370,734.49. In early
1986, the county issued Mr. Maloney a Form 1099 stating that in
1985 it paid him $298,788.16. Petitioners, on their 1985 return,
reported $370,836 of Schedule C gross receipts but did not
identify their method of accounting.
During 1986, the Internal Revenue Service (IRS) interviewed
Mr. Maloney in connection with a Federal grand jury investigation
into the county's prison construction project. Mr. Maloney
provided the workpapers that his accountant had prepared and
fully cooperated with the investigation, which continued through
1987.
In 1986, the county paid Mr. Maloney $927,992.65. Mr.
Butler recorded on the 1986 general ledger $880,565.83. In early
1987, the county issued a Form 1099 stating that it paid Mr.
Maloney $844,497.87 in 1986. After receiving this form, Mr.
Butler changed the amount of gross receipts reflected on the 1986
general ledger from $880,565.83 to $844,497.87. Subsequently,
the county issued two corrected Forms 1099, each stating that in
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Last modified: May 25, 2011