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2. Cash Distributions to Jean Ann Richard
On March 16, 1994, CFC issued to Jean Ann Richard a check
for $800,000 and recorded that transaction as a debit to account
No. 309, titled “Notes Payable--Edmund Cordes, Inc.” This record
was subsequently changed, and the transaction was recorded as a
debit to CFC’s asset account titled “Stock--Edmund Cordes, Inc.”
On March 16, 1994, Mr. Cordes, or someone on his behalf,
endorsed the check for $800,000 over to CFC, and CFC deposited
the check in its own account. CFC recorded this transaction as a
liability in CFC’s account titled “Note Payable--Jean Ann Cordes”
(Jean Ann Richard’s loan account).8
During 1994, CFC issued 11 checks totaling $90,000 to Jean
Ann Richard. Each was charged to Jean Ann Richard’s loan
account. During 1995, CFC issued 16 checks totaling $220,000 to
Jean Ann Richard. Each was charged to Jean Ann Richard’s loan
account. Four of the 16 checks, totaling $100,000, were
deposited in Mrs. Cordes’s personal checking account.
Jean Ann Richard failed to report the $800,000 distribution
or any of the other payments as any type of income in 1994 or
1995.
Also on March 16, 1994, Jean Ann Richard transferred to CFC
legal title to 1,000 shares of stock in Edmund Cordes, Inc. This
8Jean Ann Cordes is the same person as Jean Ann Richard. We
refer to this person as Jean Ann Richard throughout this opinion
wherever appropriate.
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