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(Riverbank West); Benz-Niva Corp. (Benz); R.F. Riverbend, Inc.
(Riverbend); and High Western Development Corp. (High Western).
No Federal corporate tax returns were filed for High Western,
Benz, or Youwonder.
Petitioner did not maintain adequate records of his business
activity. Respondent reconstructed petitioner’s income from this
activity by means of the specific items method, which involved
tracking checking account transactions to petitioner or his
related entities. Petitioner received income for personal
services in real estate activity from some of the above-named
corporations, as follows:
Amount and Year
Corporation 1992 1993
High Western $10,500.00 $3,800.00
Benz 63,426.50 12,000.00
Youwonder 1,688.00 11,662.00
Total 75,614.50 27,462.00
In performing the reconstruction of petitioner’s income for
1992 and 1993, respondent utilized checks that had been
negotiated by petitioner and his related entities and backed out
or removed certain items and transfers between accounts to avoid
the possibility of double counting. Respondent’s audit was
commenced after receipt of incomplete records of petitioner’s
business activity from the State of Colorado. The State of
Colorado had conducted a criminal examination and reviewed
petitioner’s and his related corporations’ records to determine
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