Raleigh Cox and Brenda J. Cox - Page 3

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          title (which in Texas is a car’s proof of ownership).  Under the            
          plan, Concord gave Washington Car possession of up to $100,000-             
          worth of cars, thus giving Cox an inventory of vehicles that he             
          could work on.  In return, Cox promised to pay Concord $2,000 a             
          week.  These payments would accumulate from week to week, and Cox           
          would draw on their accumulated value by periodically taking back           
          drafts and titles for cars so that he could resell them to third            
          parties at a profit.                                                        
               Cox and his wife reported Washington Car’s income and                  
          deductions on a Schedule C to their 2000 income tax return, which           
          was prepared by Roman Spiller, their long-time accountant.                  
          Spiller was a former IRS auditor, and had prepared both the                 
          Coxes’ personal and business returns since 1986.  Before this               
          case they had never had any reason to doubt the quality of his              
          work.                                                                       
               The Schedule C for Washington Car’s 2000 tax year reported             
          sales of $118,900, and aggregate expenses of $92,892.  But                  
          Spiller got his signs confused and reported the difference as a             
          net loss.  The Commissioner’s service center noticed the math               
          error, made the appropriate correction, and notified the Coxes              
          that the resulting adjustments required them to pay tax due on              
          the increase in taxable income, plus a penalty and interest.                
          Spiller prepared and submitted an amended tax return on which the           
          Coxes flipped the numbers from their original return, reducing              






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