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FINDINGS OF FACT
At the time they filed their petition, petitioners resided
in Pepper Pike, Ohio. Petitioners were married and filed joint
returns for the years in issue.
During the years in issue, petitioner Philip E. Parsons was
a licensed pharmacist and the president and sole shareholder of
Cedar Hill Drug Company, Inc. (Cedar Hill), which operated a
pharmacy in Cleveland Heights, Ohio, and, beginning in November
1988, a second pharmacy in Solon, Ohio. Mr. Parsons formed Cedar
Hill in 1975 and incorporated it in the State of Ohio in 1981.
In addition to filling prescriptions, Cedar Hill sold milk,
tobacco, beer, wine, and other merchandise. Mr. Parsons was an
employee of Cedar Hill and was issued Forms W-2, Wage and Tax
Statement, for the years in issue. Mr. Parsons, as the
pharmacist, did not ring up sales on the register, which was
operated by other employees. Mrs. Parsons, also a licensed
pharmacist, worked at an unrelated pharmacy, and although not an
employee of Cedar Hill, she occasionally filled in for Mr.
Parsons at Cedar Hill.
During the years at issue, petitioners retained the
accounting firm Skoda, Minotti, Reeves & Co. (SMR) to perform
bookkeeping and tax consultation services for Cedar Hill, as well
as to prepare Cedar Hill’s corporate income tax returns and
petitioners’ personal income tax returns. Joseph F. Skoda was
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Last modified: May 25, 2011