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Stainless. In so handling the receipts and expenses after
June 1, 1993, Mr. Lechner was acting in accordance with the
advice of his certified public accountant, Kenneth E. Noble (Mr.
Noble), who also acted as a bookkeeper of Stainless and made the
journal entry described above. Mr. Noble believed that this was
the appropriate way to handle the receivables receipts and the
payables payments with respect to the jobs in progress because
Mr. Lechner had closed out the checking account of the sole
proprietorship and had opened a corporate checking account for
Stainless with an initial balance of only $5,000.
The Lechners filed joint individual income tax returns
(Forms 1040) for the years 1987, 1988, 1989, and 1990. Each of
these individual returns included a Schedule C, Profit or Loss
from Business, for the sole proprietorship.
Mr. Lechner was indicted under section 7206(1) for filing
false individual income tax returns (Forms 1040) for the years
1987, 1988, 1989, and 1990. The principal false item alleged in
the indictment was the failure to report all gross receipts of
the sole proprietorship. Mr. Lechner pleaded guilty to and was
convicted under section 7206(1) of filing a false individual
income tax return for the year 1990.
Mr. Lechner was never charged with any criminal offense in
connection with the corporation income tax returns of Stainless.
The effect of the creation of the Receivable from Officer account
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