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Dawn Lucius was a staff accountant employed by Ms. Anderson.
Mr. Rangel and Ms. Lucius reconciled the income from the general
operating account to the tax returns for 1989 and 1990. Both
came to the conclusion that any deposits into petitioner’s
Merrill Lynch account were not reported on petitioner’s returns.
Ms. Lucius approached Ms. Anderson to advise her of the
situation. After advising Ms. Anderson, Ms. Lucius asked how to
proceed with Mr. Rangel. Ms. Anderson replied with an obscenity
that made it clear she was not to cooperate with Mr. Rangel.
During the civil audit, neither petitioner nor her
representatives provided Mr. Rangel with any alleged memoranda
from petitioner to Mr. Reiter about petitioner’s Merrill Lynch
account. Additionally, neither petitioner nor her
representatives mentioned the existence of such memoranda.
On January 12 and February 11, 1993, Mr. Rangel issued IDRs
for substantiation of numerous Schedule C expenses and for the
general ledger for 1988, 1989, and 1990. Copies of the IDRs were
sent to petitioner and her representatives. Mr. Rangel received
no reply to either of these IDRs.
Bank Deposit Analysis
By examining the deposits to the general operating account
and reconciling them with the tax returns, Mr. Rangel was able to
determine that none of the deposits to petitioner’s Merrill Lynch
account were included in income on petitioner’s returns.
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