- 16 -
for $220 in 1990 and $1,760 in 1992, which were not deducted by
virtue of travel and entertainment statutory limitations in effect
for those years. In 1991, WVI capitalized $137,410 in animal
trophy collection expenses and deducted $104,175. The remaining
$913 was not deducted because of the travel and entertainment
statutory limitations.
WVI’s and Petitioners’ Audits for 1989-92
In July 1991, Revenue Agent Richard Puchaty audited WVI’s tax
returns. Petitioners’ tax returns were included in the audit after
Revenue Agent Puchaty noticed an unusual pattern of recording
expenses relating to the animal trophy collection across four
different accounts in the company’s general ledger. Revenue Agent
Puchaty concluded that in light of continual mischaracterization of
the animal trophy accounts throughout the company’s ledger, as well
as his difficulty in locating the animal trophy expenses entries,
these expenses were intentionally being hidden. In an effort to
clarify WVI’s ledger system, Revenue Agent Puchaty sought an
interview with both Dr. Gow and Ms. Lee; his request was denied.
Petitioners’ 1989-92 Tax Returns
On their 1989 and 1990 returns, petitioners reported the
values of the stock awarded to Dr. Gow as $40,000 and $20,000,
respectively. They did not seek an expert valuation of the stock
before reporting the aforementioned values on their tax returns.
Petitioners reported no dividend income for 1989 and 1990, and
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011