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Early in 1998, the balance in the “Advance - Bruecher, WM.”
account grew to more than $191,000. At that point, Mr.
Bruecher’s accountant reclassified about $114,000 of these
advances as wages paid to Mr. Bruecher and filed an amended Form
941, Employer’s Quarterly Federal Tax Return, for the first
quarter of taxable year 1998, reporting said payment.1 Mr.
Bruecher reported the $120,000 as wages on his 1998 Form 1040,
U.S. Individual Income Tax Return. After the reclassification,
the “Advance - Bruecher, WM.” account had a balance of about
$77,000.
Mr. Bruecher continued to pay his personal expenses from the
corporation’s bank account. Within 9 months of the deemed
payment of wages, the balance in the “Advance - Bruecher, WM.”
account increased to $120,325.48. The following table contains
examples of expenses recorded under the “Advance - Bruecher, WM.”
account and are taken directly from Bruecher Foundation’s general
ledger for the relevant time period:
1The following table reconciles the decrease in the “Advance
- Bruecher, WM.” account and Bruecher Foundation’s deemed payment
of wages:
Decrease in “Advance - Bruecher, WM.” $114,019.20
Social Security tax (payroll tax) 4,240.80
Medicare tax (payroll tax) 1,740.00
Total 120,000.00
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Last modified: May 25, 2011