Padgett Coventry Price - Page 5

                                        - 5 -                                         
          deposited into the client trust account had not been earned by              
          the law firm.  Funds in the client trust account did not affect             
          the law firm’s income or expenses, and had no tax significance,             
          as they were client funds held in trust.                                    
               All business income was to be deposited into, and all                  
          business expenses were to be paid out of, the general operating             
          account.  This allowed Mr. Reiter and his staff to “pick up” the            
          income and expenses of the law firm.  This included distributions           
          from the client trust account to the law firm.  As fees were                
          earned they were to be distributed to the law firm from the                 
          client trust account and deposited in the general operating                 
          account.  Petitioner gave her employees instructions on how to              
          distribute funds from her cases and regarding the disbursement              
          sheet for the client trust account.                                         
               Petitioner or Mr. Ludlow had to sign checks for business               
          expenses.  During the years in issue, only petitioner and Mr.               
          Ludlow had signatory authority on the general operating account             
          and the client trust account.                                               
               Under Mr. Reiter’s accounting system for the law firm,                 
          income of the law firm not deposited into the general operating             
          account was not picked up as income.  Mr. Reiter’s system was               
          explained to petitioner, Mr. Ludlow, and the employees of the law           
          firm.  Mr. Reiter’s staff also knew how the accounting system               
          worked.                                                                     






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011