- 6 - Petitioner ran the day-to-day operations of Taxman. Mr. Garaas and Mr. and Mrs. Jondahl were not involved in Taxman’s day-to-day operations. Taxman’s business consisted of preparing Federal and State tax returns, providing tax advice, and keeping financial books and records. Taxman employed several people at any one time whose duties included preparation of tax returns, accounting work, maintenance of accounts receivable and payable, making bank deposits, signing checks, and receptionist tasks. Taxman maintained bank accounts in its name, kept corporate records, and filed corporate tax returns for the years in issue. In July 1985, petitioner was sued individually and as sole proprietor of his tax preparation business. Two of JFS’s clients sued petitioner in connection with a tax shelter investment. In September 1986, a settlement was reached in which petitioner initially agreed to pay each couple $6,000. In connection with the 1986 lawsuit against him, petitioner was deposed in July 1987. During the deposition, petitioner stated that Taxman was organized to take over the assets and liabilities of JFS. Petitioner testified in the deposition that he had transferred office equipment worth approximately $10,000, accounts receivable worth $3,000, and two bank loans totaling approximately $31,000 to Taxman. Petitioner also stated that no written agreement existed evidencing the takeover of JFS by Taxman. After the 1987Page: 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