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Simco’s Books and Records
Simco did not record any scrap metal sales on its books and
records for the period July 1, 1989, through December 31, 1991.
As of the date of the filing of Simco’s tax returns for the 1990
and 1991 fiscal years, the corporate books did not reflect that
the proceeds from the scrap metal sales for the period July 1,
1989, through June 30, 1991, were compensation to John.
The total proceeds received from the sale of scrap metal to
Dix Scrap and retained by John during Simco’s fiscal year ended
June 30, 1992, equaled $78,621.02. Sometime after June 30, 1992,
Simco recorded this amount in its books as a reduction in the
balance of loans previously made to Simco by John.5 Of this
amount, $33,870.00 was received and retained by John during the
period from July 1 through December 31, 1991, and the remainder
was received from January 1 through June 30, 1992.
Simco’s Tax Returns
Neal assumed responsibility for filing Simco’s tax returns
and signed both the original and the amended returns on behalf of
Simco. Simco’s original tax returns for fiscal years ended
5 Although the parties stipulated that the $78,621.02 in
scrap metal sales proceeds received from Dix Scrap “was booked as
a loan to John MacLean from Simco”, the exhibits and testimony
demonstrate that the $78,621.02 was actually recorded as a
repayment of amounts previously lent to Simco by John. The Court
may disregard a stipulation where it is clearly contrary to the
evidence in the record, and we do so here. See Cal-Maine Foods,
Inc. v. Commissioner, 93 T.C. 181, 195-196 (1989).
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