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total income for 1987 was $410,000, and this was the income
reported to the city of New Orleans for occupational license
purposes. On the sheet marked by petitioner as the Income
Statement, Mr. Bruno wrote: "$410,000 (includes 1099s) to City of
NO (for the payment of license)."
On the 1987 income tax return, line 1a of the Schedule C for
the medical practice reflected gross receipts or sales of
$376,206. Since petitioner told Mr. Bruno that the total income
figure of $410,000 included his Form 1099, the total amount of
the Forms 1099 in the amount of $25,794 was reported on line 4 of
the Schedule C. The gross income for the Schedule C reflected on
line 5 was $402,000.
Petitioner told Mr. Bruno that the amount of $410,000
included $8,000 shown on a Form W-2. Thus, the remaining $8,000
of the $410,000 was shown on line 7 of the first page of
petitioners' return. Since the actual amount of income shown on
that Form W-2 was $8,972.53, this was rounded to $8,973 and
listed on line 7.
For the taxable year 1988 petitioner gave Mr. Bruno a single
sheet of paper on which he wrote "Income, 250,000 office income."
Since petitioner gave Mr. Bruno certain Forms 1099
reflecting income from his medical practice, the Form 1099 income
was again segregated from the other medical practice income. Mr.
Bruno's firm added the Forms 1099 and attached the adding machine
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