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amounts deposited. Mr. Skoda attributed these discrepancies to
the large volume of workmen’s compensation prescriptions filled
by Cedar Hill, wherein the nominal amounts billed for such
prescriptions were greater than the actual amounts reimbursed to
Cedar Hill for such prescriptions. Mr. and Mrs. Parsons did not
mention to Mr. Skoda that they had withdrawn for personal use
some of the amounts listed as deposits on the pink sheets, and
Mr. Skoda did not review the Parsonses’ personal bank accounts
during the years at issue.
At various times, Mr. Parsons advanced funds to Cedar Hill,
and as of January 31, 1987, Cedar Hill’s books recorded debt owed
to Mr. Parsons of $54,891.68. In February 1987, in an effort to
avoid Mr. Parsons’ having imputed interest income from Cedar
Hill, SMR recharacterized on Cedar Hill’s books $52,000 of the
indebtedness to Mr. Parsons as Mr. Parsons’ paid-in capital. As
a result of SMR’s action, by February 28, 1987, Cedar Hill’s
indebtedness to Mr. Parsons was recorded as only $3,066.68, and
by April 30, 1987, the indebtedness had been eliminated from
Cedar Hill’s books.
In April or May of 1989, Donald Paskert, a revenue agent for
respondent, began a Taxpayer Compliance Measurement Program audit
of Cedar Hill. At that time, Mr. Paskert asked for and received
all of Cedar Hill’s books and records. During his audit of Cedar
Hill, Mr. Paskert was unable to reconcile the deposit amounts
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Last modified: May 25, 2011