Daniel J. Culnen - Page 14




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               D.  Discussion                                                         
                    1.  Petitioner’s Case                                             
               Petitioner called four witnesses, including himself, all of            
          whom testified consistently that, for many years (including the             
          years in question), petitioner had used Culnen & Hamilton as an             
          incorporated pocketbook, having the corporation make payments on            
          his behalf, which payments were posted to Culnen & Hamilton’s               
          books as loans to petitioner.  Robert Levin, one of those four              
          witnesses, had been petitioner’s accountant for more than                   
          20 years.  He also did accounting work for Culnen & Hamilton.  He           
          testified that, from time to time, petitioner would reduce the              
          balance of his Culnen & Hamilton loan account by liquidating                
          investments he had made and paying the proceeds to Culnen &                 
          Hamilton.  Mr. Levin explained the rationale for that procedure             
          as follows:                                                                 
                    Culnen & Hamilton was an "S" corporation.  There                  
               was a lot of undistributed taxable income.  He                         
               [petitioner] wouldn’t take all the–-he’d pay taxes on                  
               it, and, God knows, he paid a lot of taxes over the                    
               years, but he felt the money that was left in Culnen &                 
               Hamilton, because it was undistributed to him, that he                 
               could spend and do what he wanted with.                                
                    So, rather than write a check to himself and write                
               a check to a third party, he would just–-if he wanted                  
               to buy a company or whatever, he would just write it                   
               out–-have Beatrice, the bookkeeper, write it out of                    
               Culnen & Hamilton, charge it to his loan account, okay,                
               and that’s the way he did business for the 20 years                    
               that I’ve been his accountant.                                         







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