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$28,000 in 1982 and $60,000, annually, thereafter. Petitioner
designated Seattle First National Bank, Spokane and Eastern
Branch (Seafirst), as the depository for all of Western’s funds.
All moneys that were paid on Western’s accounts receivable were
deposited in the Seafirst account.
Petitioner worked 160 to 180 hours per month for Western and
performed all services necessary to generate Western’s gross
receipts. From 1992 through 1995, petitioner made all major
decisions for Western including: Paying creditors, hiring
employees, signing checks, determining employee compensation,
renewing Western’s malpractice insurance, and signing Western’s
Federal tax returns. No other person performed legal services on
behalf of Western.
Petitioner received funds from Western as his needs arose
and was not compensated for his services at predetermined
intervals. In 1992 and 1994, respectively, Western paid
petitioner $135,000 and $132,000. Western issued checks to
petitioners and their creditors (e.g., Nordstrom, Teneff Jewelry,
Fit and Hollywood, and National Golf), and petitioner informed
Western’s accountant and tax return preparer, Bob Moe and
Associates (Moe), that these payments were draws. Western
classified the payments as “loans” on its corporate ledgers and
did not file Forms 1099-MISC, Miscellaneous Income, relating to
the payments. Western also paid petitioner’s law license renewal
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Last modified: May 25, 2011