- 5 - Mr. Knauss put TECO’s accounting system in place. Sometime after Mr. Knauss retired, Vernon hired Patrick Allison, C.P.A. (Mr. Allison), to prepare TECO’s income tax returns for the years in issue. At the time, Mr. Allison was the only C.P.A. located in Grand Saline, Texas.6 In order to prepare TECO’s tax returns, Mr. Allison was given ledgers, summaries, bank statements, and canceled checks. Mr. Allison had full access to TECO’s employees and could ask them any questions relating to the preparation of TECO’s tax returns. Neither Vernon nor Janet had an advanced knowledge of taxation. Vernon graduated from high school and attended Tyler Junior College for one semester. Vernon never took any 5(...continued) In 1985, Ms. Culpepper transferred 185 shares of her TECO stock to Janet. Janet then transferred 92 shares of her TECO stock to Vernon. At this time, Bernie owned 47.14 percent of TECO, Ms. Culpepper owned 26.43 percent of TECO, Janet owned 13.29 percent of TECO, and Vernon owned 13.14 percent of TECO. Later that year, TECO purchased 329 shares of its stock from Bernie, and Vernon purchased 1 share of TECO stock from Bernie giving Vernon a total of 93 shares of TECO stock. At this time, Ms. Culpepper owned 49.86 percent of TECO, Janet owned 25.07 percent of TECO, and Vernon owned 25.07 percent of TECO. Although at this time there was no single majority shareholder, if Janet and Vernon decided to combine their voting power they could outvote Ms. Culpepper--i.e., Janet and Vernon together owned 50.14 percent of TECO. As a result, Ms. Culpepper sued Vernon, Janet, and TECO to gain control of the company. 6 From 1976 through part of 1989, TECO’s manufacturing plant was located in Grand Saline, Tex.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011