- 4 - remodeled commercial and residential property. It maintained a bank account at Lakeside Bank. Messrs. Vazzana and Valenza did not deposit all of V&V's gross receipts into V&V's bank account. Instead, they cashed a substantial number of customer checks at other neighborhood banks. On its 1988 and 1989 Forms 1065 (U.S. Partnership Return of Income), V&V reported gross receipts of $373,483, and $548,863, respectively. The returns were prepared by V&V's accountants, Barbara Charal and Michael J. Baumhart. Messrs. Vazzana and Valenza knew that their accountants calculated V&V's gross receipts by totaling the deposits in V&V's account and that the cashed checks would not be reported on V&V's income tax returns. In early 1991, respondent audited V&V's returns and Revenue Agent John Lee was assigned to the case. Mr. Lee asked Messrs. Vazzana and Valenza to provide records of V&V's income and customer accounts. They failed to cooperate with Mr. Lee, so he summoned V&V's bank records and obtained information directly from V&V's customers. Based on these documents, Mr. Lee determined that V&V underreported its gross receipts by $132,046 for 1988 and $111,734 for 1989. Messrs. Vazzana and Valenza each owned a one-half interest in rental property valued at $200,000. The building was previously owned by Shield Development Corp. (SDC), a company in which Messrs. Vazzana and Valenza were stockholders. In 1987,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011