- 3 -
the handwritten ledger, that the invoice had been paid. In
addition, the secretaries recorded, in the general ledger, the
customer checks they deposited in the Company’s account and used
this information to prepare monthly financial statements.
From 1990 through 1993, petitioner and his secretaries
recorded the receipt of all of the customer checks in
petitioner’s handwritten ledger. During this period, petitioner
cashed, or deposited into his personal bank account, customer
checks and used the proceeds for his personal benefit. The
Company’s balance sheets for each year in issue reflected
significant balances in the shareholder equity accounts
(shareholder accounts), which included shareholder loan, capital
stock, retained earnings, and current earnings.
Beginning in 1990, Ms. Cason became concerned because some
of the customer checks were not being deposited into the
Company’s account. Ms. Cason informed Mr. Kisalus that she did
not want to file a 1990 joint return. Mr. Kisalus asked
petitioner whether all customer checks were being accounted for,
and petitioner told Mr. Kisalus that all of the income was being
recorded in the Company’s books. Based upon petitioner’s
assurance, and Mr. Kisalus’s belief that Ms. Cason would qualify
as an innocent spouse even if petitioner were underreporting his
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011