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Accounting and Tax Return Preparation
Petitioner borrowed funds to finance the loans that he made
to WMG and other companies in which he held an interest. Those
funds were borrowed from various credit card companies with whom
petitioner had lines of credit.13 After depositing the proceeds
from those borrowings, petitioner used his personal checking
account to advance funds to WMG and other entities. Petitioner
made monthly payments, generally the minimum amount due, to the
credit card companies. The monthly payments covered interest.
Kelly Posthumus was an accountant employed by IBC. She
maintained petitioner’s personal checking account records, wrote
checks to pay his bills, prepared schedules of his loans to
companies, and prepared yearend schedules and summaries for
petitioner’s tax accountants. Every time petitioner made a loan
to a company, Ms. Posthumus recorded it on a schedule set aside
for that particular company. Each loan was separated by date,
check number, and amount on the schedule. At the end of each
year, Ms. Posthumus would review petitioner’s credit card and
credit line statements and prepare a schedule of petitioner’s
interest expense for the year to give to petitioner’s tax
accountants. The yearend schedules and summaries were also
prepared from check registers of petitioner’s checking accounts.
13The credit card accounts from which petitioner obtained
funds to make loans to WMG had high interest rates, perhaps as
high as 20 percent.
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