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commercial service units, similar to those petitioner had built
on the Prado Road property, were constructed and leased to
tenants. Petitioner continued to manage the Cross Street
property after its development by overseeing repairs, supervising
maintenance and landscaping, responding to tenant complaints, and
initiating lease agreements.
3. Trust Income and Distributions
The Pago Trust filed Forms 1041, U.S. Income Tax Return for
Estates and Trusts, for the taxable years 1994 through 1998.17
Mr. Norton signed all of the Pago Trust’s tax returns but did not
review them for accuracy or compare the information reported on
the returns to the Pago Trust’s accounting records.
In 1994, the Pago Trust’s only source of income was Inga
Inc.’s payments on the installment note.18 For the taxable years
1995 through 1998, the Pago Trust derived its income solely from
payments on the installment note and from rental fees paid for
the units on the Prado Road property. The Pago Trust’s real
16(...continued)
by borrowing against the Prado Road property and the Cross Street
real estate.
17Mary L. Vincent prepared all of the tax returns filed for
the Pago Trust, the McKenzie Trust, and the Gouveias beginning
with the 1994 taxable year. Although petitioner did not know
what her level of training was, he chose Ms. Vincent because she
was familiar with trusts and Forms 1041.
18All of the payments received on the installment note were
deposited into the Pago Trust’s bank account.
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