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Since at least July 1984, petitioner has conducted his
accounting practice through a professional corporation (PC) along
with several other accountants, with each accountant owning an
equal percentage of the PC. During all relevant periods,
petitioner was a material participant in the PC. The name of the
PC has been amended on several occasions since its inception to
properly reflect its practicing members and shareholders.
Petitioner has been a partner in a partnership known as the
1203 Partnership since at least July 1984. The 1203 Partnership
is the owner of the real estate and office building located at
1203 West Second in Grand Island, Nebraska (1203 office
building). During all relevant times, the ownership of the 1203
Partnership was held equally by the same individuals who were
then shareholders of the PC. Although there have been changes in
the partners of the 1203 Partnership, the partnership has never
been dissolved, liquidated, or terminated.
Since at least July 1984, petitioner has been a shareholder
of Business Management Services, Inc. (BMS), which was organized
as a “C” corporation. BMS functions as a computer service bureau
by preparing customers’ payroll and computerized general ledgers.
During all relevant times, the shareholders of BMS have been the
same individuals as the shareholders in the PC, with up to two
additional shareholders. The additional shareholders were
neither accountants, nor owners of the PC. The officers and
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