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corporations generated.
Since around 1989 to the time of the trial in this case,
Robert Miller (Mr. Miller), a certified public accountant,
prepared the tax returns of, and provided certain consulting and
accounting services to, one or more of the Braswell companies.
Around August or September 1994, Christine Wu (Ms. Wu), who
served as petitioner’s controller approximately from 1993 until
1995, sent Mr. Miller financial statements for petitioner’s
fiscal year ended January 31, 1994, in order to enable Mr. Miller
to prepare petitioner’s Form 1120, U.S. Corporation Income Tax
Return, for its taxable year ended on the same date (Form 1120).
Thereafter, during September 1994, approximately eight months
after the close of petitioner’s fiscal and taxable years ended
January 31, 1994, Ms. Wu sent Mr. Miller a document entitled
“G.B. DATA SYSTEMS & CONTROLLED GROUP PRODUCT USAGE 2/1/93-
1/31/94” (purported product usage document). Ms. Wu sent that
document to Mr. Miller in order to have him (1) prepare and book
on petitioner’s behalf certain accounting entries and (2) reflect
such accounting entries in the Form 1120 that he was preparing
for petitioner.
Based upon the purported product usage document that Mr.
Miller received from Ms. Wu, Mr. Miller prepared adjusting
journal entries in September 1994 that debited royalty expense
and credited royalties payable in the amount of $1,158,084. The
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