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income tax returns for the period February 1, 1980 to
the present, attaching the affidavit to the returns as
an exhibit, no later than December 31, 1985.
Pursuant to the cooperation agreement, Mr. Feinsmith filed
an amended 1983 personal income tax return on January 6, 1986.
He reported on that return additional income of $31,667,
representing what he believed was his 1/3 share of Randy Hall’s
false invoice deduction attributable to its taxable year ended
January 31, 1983. Mr. Feinsmith’s 1/3 share was actually
$31,399.81. The parties agree that $31,399.81 is a constructive
dividend to Mr. Feinsmith for 1983, arising out of deductions not
allowable on Randy Hall’s 1982 corporate income tax return.
Pursuant to the cooperation agreement, Randy Hall filed an
amended 1983 return on January 7, 1986. Randy Hall reported on
that return a $49,179 increase in income resulting from its
reduction of its cost of goods sold as originally reported.
Randy Hall acknowledged on the return that the reduction was
required because it had originally included in its cost of goods
sold computation nonexistent business deductions totaling
$337,300. Randy Hall reported that the following shareholders
had “ADDITIONAL INCOME ARISING FROM THE AFOREMENTIONED
DEDUCTIONS” in the corresponding calendar years:3
3 The total of some of the rows and columns is off by $1.
This discrepancy is attributable to rounding.
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Last modified: May 25, 2011