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In 1987, 1988, and 1989, petitioners were employed by, and
received wages from, Top Play.6 Also during those years, Mr.
Jacobsen was employed by, and received wages from, Chinook, Inc.
(Chinook), doing business as Five Corners Saloon.
In 1987, Top Play purchased a mobile telephone system for
$1,797. This purchase was charged to Mr. Jacobsen’s credit card.
Top Play paid the credit card company $1,300 in 1987 and $763 in
1988 for the purchase of the mobile telephone system.
Some of the limousine runs generated cash for which no run
sheets were prepared, and petitioners often paid drivers in cash.
Petitioners did not maintain accurate records of Top Play’s cash
receipts and cash payroll. They did not inform Top Play’s
accountant of the cash receipts and payroll items. As a result,
Top Play’s 1987 and 1988 income tax returns and financial
statements did not reflect those items.
In February of 1990, petitioners sold the assets of the
limousine service to Susan Pavlak for approximately $350,000.
After a few months, Ms. Pavlak compared Top Play’s operating
performance in 1989 to its performance in 1990, as indicated in
the financial records she had reviewed before purchasing the
limousine business. She concluded that the limousine business
was producing less revenue.
6In 1988, Ms. Ferguson was employed by, and received wages
from, Gantos, Inc. In 1987, Mrs. Jacobsen was employed by, and
received wages from, Gray Display and Chinook, Inc.
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