- 8 - In preparing petitioner's 1990 return, the accountant erroneously deducted $263,700 from gross receipts.2 The accountant reduced petitioner's gross receipts by the amounts transferred from the main account to the refund account. The accountant thought that checks with the notation of "rent" were for petitioner's payment of rent to the hospital. Those rent payments, however, were for petitioner's personal residence. On the Schedule C attached to his 1990 return, petitioner reported gross income of $1,165,076 from his business, computed by reducing gross receipts of $1,194,606 by $29,530 for returns and allowances. On the Schedule C, petitioner reported total business expenses of $521,980 and a net profit of $643,096. On petitioner's 1990 return, in addition to $643,096 of net profit from his practice, petitioner reported $52,810 of interest income, of which $3,695 was from First Interstate Bank, and $5,309 of dividend income. In computing petitioner's 1991 Washington State excise tax, the accountant did not use petitioner's bank statements, although he had those records. Instead, the accountant estimated petitioner's 1991 State excise tax on the basis of petitioner's 1990 income, taking into account the fact that petitioner 2The accountant erroneously assumed that interest paid to petitioner by James & Associates had been deposited into the business account. The accountant also made an adjustment of $200,000 but could not recall to what transaction the adjustment related.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011