Albert M. Graham and Martha A. Graham - Page 20

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          retirement account to petitioner in 2003, and lost three houses             
          in foreclosure.                                                             
               Lewellen settled the case with petitioner in October 2001,             
          and agreed to pay petitioner $220,000 in 2002.                              
          D.   Preparation and Filing of Petitioners’ Tax Returns                     
               Petitioners filed income tax returns for 1995, 1998, and               
          1999.  Lewellen prepared the 1995, 1998, and amended 1998 tax               
          returns, but not the 1999 return.                                           
               Lewellen recorded petitioner’s law firm's gross receipts for           
          1995 and 1998 on Schedule C, Profit or Loss From Business, based            
          on the total amount of revenues deposited in the firm's business            
          account and recorded as income in the general ledger under                  
          “client billings”.  Petitioners did not give Lewellen the law               
          firm’s accounts receivable, client billings, invoices or receipts           
          supporting the law firm’s expenses for 1995 and 1998.                       
               Petitioners deducted personal expenses of $27,636 and                  
          $4,476, respectively, as business expenses on their 1998 and 1999           
          tax returns.                                                                
               1.   1995                                                              
               Petitioner did not tell Lewellen that petitioner or his                
          children had received cash and an interest in two parcels of real           
          property through the Anis partnership in 1995.  Petitioners did             
          not report on their initial or amended 1995 return income or loss           







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