James J. Coyle - Page 8

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          and axles from one of Regal’s employees, Mr. Gibson would give              
          cash to the employee and have that employee sign a receipt.  Mr.            
          Gibson provided the Court with 13 receipts dated from July to               
          December 1993 indicating that he paid Regal $8,041 for wheels and           
          axles.  The additional item of omitted income determined for 1993           
          as to Mr. Coyle was $2,500 of income from sales of wheels and               
          axles to Mr. Pearce.  Petitioner failed to present any evidence             
          as to this adjustment.                                                      
               During the years at issue, Regal employed a bookkeeper to              
          keep its records.  The sales manager or the office manager would            
          often make notations in Regal’s books and records concerning                
          sales of mobile homes.  In 1992, Regal purchased a computer                 
          system to better maintain its bookkeeping records.  Either Mr.              
          Coyle or the bookkeeper would prepare the bank deposit slips for            
          deposits made into Regal’s bank accounts.  Petitioner, the                  
          bookkeeper, or any one of Regal’s employees made deposits into              
          Regal’s bank accounts.  Regal did not produce copies of its books           
          and records to respondent or at trial.                                      
               Regal’s certified public accountant and tax return preparer,           
          Steven D. Herman (Mr. Herman), reviewed Regal’s books and records           
          quarterly because he filed quarterly and annual tax returns for             
          Regal.  He did not audit or analyze Regal’s books and records.              
          Mr. Herman did not rely on the original underlying documents when           
          preparing Regal’s returns because they were not available to him.           

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