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The Bank Accounts
Neither petitioner, Charlene, nor Craig maintained any
personal checking accounts of any kind. Petitioner transferred
funds freely among JJH, CCA, and Coastal, as he saw fit.
1. JJH Account—Petitioner opened an account in the name of
JJH in 1985 (JJH account) over which he had signature authority,
and this account remained open throughout 1994. Petitioner used
the JJH account as his personal and business account, and he paid
all business and personal expenses from this account. Charlene
also had access to the account and used it to pay some of her
personal expenses. Petitioner deposited all income generated from
his return preparation business into the JJH account. Petitioner
did not designate what amounts in the account, if any, were salary
or other income to him, and he did not document whether expenses
paid from the account were business or personal. Petitioner
commingled his personal income and expenses with his business
income and expenses without limitation.
As relevant herein, petitioner wrote a total of $150,208 in
checks from the JJH account. Of the total, $47,105 related to
expenses of operating petitioner’s return preparation business, and
the $103,103 balance related to personal living expenses of
petitioner and his family.
For 1994, total deposits to the JJH account were $176,547,
comprising $144,812 in gross receipts and $31,735 in transfers
from CCA’s and Coastal’s accounts. Petitioner withdrew virtually
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