- 17 - that during 1994, approximately eight months after the close of petitioner’s fiscal and taxable years ended January 31, 1994, Ms. Wu, petitioner’s controller, sent Mr. Miller the purported product usage document.11 She provided 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 on petitioner’s behalf for the year at issue. Based on the purported product usage document, Mr. Miller prepared adjusting journal entries in September 1994 that debited royalty expense and credited royal- ties payable in the amount of $1,158,084. The amount of those entries was the same as the amount shown on the purported product usage document as the last entry under the column headed “NET TOTAL (IN BOTTLES)”. After having prepared the royalty adjusting journal entries, Mr. Miller completed preparation of petitioner’s Form 1120 for the year at issue based upon those entries and petitioner’s financial statements for the fiscal year ended January 31, 1994. Thereafter, but prior to booking the royalty adjusting journal entries in petitioner’s books and prior to filing petitioner’s return for the year at issue, Mr. Miller confirmed with Mr. Braswell the correctness of booking those 11See supra note 9.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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