Edward R. Stolz II - Page 5




                                        - 5 -                                         
          Accuracy of 1995 Return                                                     
               For purposes of preparing the 1995 return, petitioner                  
          provided Mr. McConnaughy with a hard copy of the records                    
          maintained by an in-house accounting software system used for his           
          radio business.  Petitioner also produced documentation such as             
          receipts, invoices, bank statements, and payroll ledgers when               
          requested to do so by Mr. McConnaughy.  Petitioner did not                  
          examine or discuss the contents of the return when it was                   
          presented to him for signing on October 15.                                 
               Petitioner’s 1995 return reported $876,342 in business                 
          expenses.  During the course of the subsequent audit of this                
          return, petitioner substantiated $637,769 in business expenses.             
          The parties agreed that petitioner was not entitled to deductions           
          for the resulting $238,573 difference and was liable for an                 
          additional $17,823 in tax beyond the $10,756 reported on the 1995           
          return.                                                                     
               The 1995 return lists no single item which accounts for this           
          disparity.  Discrepancies between amounts as reported on the                
          return and as substantiated exist with respect to a number of the           
          enumerated expense categories.  Car and truck expenses total                
          $9,000 on the return and $280.32 on the reconstruction.  The                
          return lists $241,874 for taxes and licenses; the reconstruction            
          includes a category for taxes and licenses of $8,667.65 and a               
          category for payroll taxes of $99,842.89.  Depreciation of                  






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011