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about July 29, 1994, accountant Bradac sent Burton a letter which
stated in part:
Loans to Stockholders cannot be identified from
our workpapers. If it could be identified, any
amounts due from stockholders should be shown
here, and the Corporation should make sincere
efforts to collect. Any stockholder who has not
repaid a corporate loan has personal income to
report if the loan is forgiven by the Corporation.
On October 25, 1995, the Bensons filed their 1994 return.
4. Transfers From NPI
In 1993, Burton caused NPI to issue: (1) Check Nos. 424,
439, and 444, totaling $129,480 from NPI’s bank account made
payable to the California Franchise Tax Board to pay his personal
tax liabilities; and (2) check Nos. 423, 425, 432, and 438 from
NPI’s bank account made payable to the Internal Revenue Service
(IRS) to pay his personal tax liabilities, the aggregate amount
of which was $378,000.39
In 1994, Burton caused NPI to: (1) Issue check Nos. 452,
462, and 468 totaling $28,745 from NPI’s bank account made
payable to the California Franchise Tax Board to pay his personal
tax liabilities; (2) issue check Nos. 446, 451, 455, and 461
39The parties stipulated that check No. 424 for $81,000 and
check No. 444 for $28,480 totaled $129,480, which was obviously
an error since these two sums equal $109,480. It is clear from
the documentary evidence in the record that three checks, Nos.
424, 439, and 444 were written from NPI’s bank account to the
California Franchise Tax Board in the total amount of $129,480.
Additionally, it is clear from the evidence that NPI issued
checks, Nos. 423, 425, 432, and 438 to the IRS in the total
amount of $378,000.
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