- 6 - 3. Roofing Services Provided by Kelso In 1994, Badell hired Kelso to construct a slate roof on the Badells’ residence. Kelso usually gives estimates to customers before beginning to work on projects. However, it did not give B&W or the Badells an estimate of the cost of constructing the roof on the Badells’ residence. Kelso began to construct the roof in 1994. Kelso billed B&W $49,000 on December 31, 1994, for constructing the roof on the Badell residence. B&W made no payments to Kelso until September 1997. Kelso did not try to collect that amount for an extended period of time because its personnel believed B&W was “working off” B&W’s charges for legal services by constructing the roof on the Badell residence. Kelso reported the $49,000 as income on its 1994 return, and on its gross profit report for 1994. Kelso credited its accounts payable to B&W for legal services by $49,000 as of December 31, 1994. Kelso worked on the Badell residence from 1994 to 1999, for which it billed B&W as follows:Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011