Jerry J. and Susan N. LeBouef - Page 9




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          C.  Mr. Aulisio testified that it was common practice in the                
          accounting industry, in order to deal with Form 1099 amounts                
          misreported to the IRS by third parties, to “make full disclosure           
          by putting the exact same number in and out.”  Aside from the               
          questionable validity of this statement, we find it noteworthy              
          that Mr. Aulisio did more than just report and subtract the same            
          numerical figure.  He affirmatively labeled the cost of goods               
          sold “PROJECT COSTS”, a term which connotes active operations to            
          a far greater extent than it discloses the alleged situation of             
          inactivity.                                                                 
               Webster’s defines “disclose” as “to expose to view” and “to            
          make known: open up to general knowledge * * *; esp: to reveal in           
          words (something that is secret or not generally known):                    
          DIVULGE”.  Webster’s Third New International Dictionary 645                 
          (1976).  Accordingly, we take issue with petitioners’ and Mr.               
          Aulisio’s characterization of the Schedule C reporting as a form            
          of disclosure to the IRS.  To report that a particular entity               
          earned gross receipts, incurred project costs and business                  
          expenses, and operated at a loss, all with the material                     
          participation of its proprietor, hardly exposes, makes known,               
          reveals, or divulges that the entity was inactive, that payments            
          were misreported by third parties, and that the income shown on             
          the Schedule C was actually that of a corporation.  If the true             
          intent of petitioners and Mr. Aulisio had been to disclose the              






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