Christopher Y. Kimm - Page 3

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          Asian investors.  At that time, the real estate experience of               
          petitioner’s father consisted of the ownership of a 7-Eleven                
          franchise for approximately 22 years and the purchase and sale of           
          two commercial properties and his personal residence.                       
               The proposed arrangement was for petitioner’s father to                
          locate potential real estate investments and advise petitioner on           
          their profitability.  Petitioner’s father agreed to drive around            
          Southern California and assist in locating investment                       
          opportunities.  In exchange, petitioner orally agreed to pay2               
          petitioner’s father $30,000 annually for his services.                      
          C.   Maintenance of Records                                                 
               In December 1996, petitioner opened a checking account with            
          Bank of America (Bank of America account).  The Bank of America             
          account was petitioner’s personal account.  During the same                 
          month, petitioner’s father received a check drawn from                      
          petitioner’s Bank of America account in the amount of $30,000.              
               At this time, petitioner’s father did not have a checking              
          account.  Therefore, in January 1997, petitioner’s father asked             
          Mark M. Hathaway (Mr. Hathaway), his tax attorney and C.P.A., to            
          deposit the check in Mr. Hathaway’s client trust account (trust             
          account).  From the trust account, Mr. Hathaway made payments as            


               2 We use the words “pay,” “paid,” and “payment” in our                 
          findings of fact for convenience only.  We do not intend our use            
          of these terms to indicate any conclusion about the substance of            
          the transactions at issue.                                                  





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