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1998. As a result, the IRS determined that the Gownis should
have included an additional $30,937 in income.
The Gownis received and deposited into their personal bank
accounts checks from Bishoy, net of repayments, totaling $32,614.
The IRS determined that Bishoy was an S corporation during 1999.
Accordingly, the IRS determined the net taxable distribution that
the Gownis received from Bishoy by reducing this $32,614 amount
by (1) the amount of income that the Gownis reported from the
operations of Bishoy on their 1999 return and (2) one-half of the
ending balance of the accumulated adjustments account reported on
Bishoy’s Form 1120S filed for 1998. As a result, the IRS
determined that the Gownis should have included an additional
$20,677 in income.
The Gownis received and deposited into their personal bank
accounts checks from Pyramid, net of repayments, totaling
$39,641. The IRS could not determine whether Pyramid was an
S corporation during 1999. The IRS did, however, determine that
the Gownis should have included this amount in income.
3. Other Income
The Gownis received and deposited into their personal bank
accounts unexplained amounts of cash and checks from sources
other than their business entities or those reported on their
income tax return totaling $180,781. The IRS determined that the
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