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various receipts for the purchase of air conditioner parts and
services on trucks, etc., constituted the records of Treu Air.
Petitioner did not maintain a personal checking account, and he
was paid in cash. In addition, Treu Air paid for petitioner’s
tolls and gasoline. Treu Air had no credit, and the expenses for
some of the machinery installed were paid in cash. Petitioner’s
brother would draw a check payable to cash or to his own name and
note on the check register the amount paid to petitioner. Mr.
Burgess apparently was paid in the same way, and it appears that
he received $25,000 in compensation during 1999. At the end of
the year, Treu Air issued a Form 1099-MISC, Miscellaneous Income,
to petitioner showing that he received gross income of $35,000.
In early 2000 petitioner used the Form 1099-MISC to establish his
income in a domestic relations matter. In 2000 Treu Air hired an
accounting firm to prepare the various corporate tax forms and
returns for 1999. The corporate returns were prepared from
information supplied by petitioner’s brother.
Petitioner and his wife filed a joint 1999 Federal income
tax return on May 5, 2000. The return was not timely filed. On
the return petitioner reported gross income of $1,000. He
reported no income from Treu Air. Petitioner originally
maintained that he had received no income from Treu Air in 1999.
During the examination of the 1999 return, however, petitioner
gave the revenue agent an affidavit claiming that he was paid
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