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Ahmed’s 1995 Gross Income Taxable Income Tax Liability
As Stipulated $113,390 $87,262 $19,367
As Reported 49,000 22,872 3,431
Understatement $ 64,390 $64,390 $15,936
% Understatement 57% 74% 82%
Ahmed’s 1996
As Stipulated $95,698 $70,325 $14,478
As Reported 40,500 15,127 2,269
Understatement $55,198 $55,198 $12,209
% Understatement 58% 78% 84%
Ahmed’s 1997 (Collapsed)
As Stipulated $2,557,113 $402,378 $133,652
As Reported 2,562,506 181,236 36,896
Understatement ($ 5,393) $221,142 $ 96,756
% Understatement 0% 55% 72%
Ahmed’s 1998 (Collapsed)
As Stipulated $6,277,825 $2,255,213 $866,668
As Reported 5,493,205 940,834 257,153
Understatement $784,620 $1,314,379 $609,515
% Understatement 12% 58% 70%
Based on the stipulated income and expense figures, the
schedule below reflects our calculation of the dollar amounts of,
and the percentages for, the understatements of gross income, of
taxable income, and of estimated tax liability that occurred on
each of K & M’s 1995 and 1996 corporate Federal income tax
returns.
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