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accountants specifically concerned Mr. Sullivan’s and
petitioner’s bonus checks that had been deducted by the
corporation as salary, but had not been reported to the
Government as such on Forms W-2. In addition, no withholding tax
had been taken from petitioner’s and Mr. Sullivan’s bonuses.
Petitioner’s friendship with Dr. Deland ended during 1996,
after petitioner’s sister, who also worked for the corporation,
was dismissed from her position. Petitioner did not receive a
bonus during and for the 1996 year, and she resigned from the
employ of the corporation.
During the spring of 1997, the corporation sent petitioner
Forms W-2c, Statement of Corrected Income and Tax Amounts, for
1993, 1994 and 1995, which reflected the bonuses (additional
compensation) in the amounts of $25,000, $35,000, and $35,000,
respectively. After receiving the Forms W-2c, petitioner did not
amend her 1993, 1994, or 1995 income tax returns to report the
increased amounts reflected on the Forms W-2c. During December
1997, petitioner was advised that she was under criminal
investigation by the Internal Revenue Service. Ultimately, there
was no prosecution of petitioner in connection with her tax
matters.
During 1995, petitioner’s husband received a $1,300
distribution from Mutual of America which was reflected on a Form
1099-R, Distributions From Pensions Annuities, Retirement or
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