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Date of bill Amount billed Work performed
12/31/94 $49,000.00 First house billing
12/31/95 4,668.00 Second year bill
1/22/97 4,222.86 1996 annual work
3/9/99 1,640.63 Roof & gutter repairs
3/17/99 288.75 Replace damaged slate;
clean gutters
Kelso performed roofing work on B&W’s office building, for
which it billed B&W $1,572.18 in 1997 and $765.27 in 1999. Kelso
had billed B&W $53,668 as of December 31, 1995, and $62,157.69 as
of March 17, 1999, for the work performed on the Badell residence
and the B&W roof from 1994 to 1999.
E. Preparation of B&W’s Tax Returns for 1995 and 1996
B&W used a computer program to prepare its Forms 1120S, U.S.
Income Tax Return for an S Corporation, for fiscal years 1995 and
1996. Wilson gathered the information for the return and
reviewed the return when it was completed. Badell signed B&W’s
returns as B&W’s president.
F. Audit of B&W’s Returns
A revenue agent began examining B&W’s returns in July 1996.
The revenue agent also examined the returns of B&W’s
shareholders, Badell and Wilson, and met with them separately in
July 1996.
The revenue agent met with Mr. Kelso and Blume on October
21, 1996, to discuss the roofing job on the Badell residence.
Mr. Kelso and Blume told the revenue agent that B&W intended to
“work off” the cost of the roofing job.
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Last modified: May 25, 2011