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into personal accounts, or took for personal use, additional
corporate funds totaling $85,688 in 1988.14
Petitioner reported no dividend income on his 1988 return
from any of his corporations, and the total reported as wages or
salary was $37,500.
Northwest Audit
Northwest commenced an audit of petitioner’s corporations’
consolidator activities on March 1, 1988. Petitioner retained an
attorney, Sheldon Belofsky (Belofsky), to represent him and his
corporations in the matter of Northwest’s audit of their
consolidator activities.
Northwest’s audit of petitioner’s corporations’ consolidator
activities revealed large “round number” withdrawals from
corporate accounts going into various brokerage firm accounts.
The brokerage account statements were not kept at petitioner’s
corporations’ offices, and Northwest had trouble obtaining copies
of the statements from petitioner or from the brokerage firms.
During the course of Northwest’s audit of petitioner’s
corporations’ consolidator activities, petitioner refused to give
Northwest records of receipts from ticket sales to subagents.
Petitioner also refused to give Northwest’s auditors personal
14 This $85,688 does not form any part of the $986,856 in
funds at issue in this case that respondent asserts is taxable
income of petitioner in 1988.
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