Timothy Dean Strong - Page 7

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          Item           1990     1991       1992       1993       1994               
          Gross                                                                  
          receipts                                                               
          or sales     $20,100                                $81,640              
                                $24,150    $26,210    $47,934                         
          Returns &                                                              
          allowances   ---      ---        ---        2,110      ---                  
          Net sales    ---    ---    ---   45,824   ---                               
          Cost of                                                                
          goods sold   ---      ---        ---        29,151     66,204               
          Gross                                                                  
          profit       ---      ---        ---        16,673     15,436               
          Total                                                                  
          expenses     19,642   24,818     24,970     30,016     15,436               

          Net profit                                                             
          (loss)       458      (668)      1,240                 -0-                  
                                                      (13,343)                        
               The Forms 1040 Mr. Strong filed reflect a $65 tax liability            
          based on self-employment tax in 1990 and a $175 self-employment             
          tax liability in 1992.  Mr. Strong reported no other tax on the             
          Forms 1040 for 1990-94.                                                     
          Mr. Strong’s Initial Contacts and Discussions With A Revenue                
          Officer                                                                     
               In late 1991, Mr. Strong was contacted by an Internal                  
          Revenue Service (IRS) revenue officer.  The purpose of this                 
          contact was to inquire regarding Mr. Strong’s unpaid income tax             
          liabilities for 1987 and 1988 and his unfiled income tax returns            
          for 1989 and 1990.  Mr. Strong refused to provide the revenue               
          officer with any personal or financial information, but he told             
          the revenue officer that he expected his tax liabilities for 1989           
          and 1990 to be at least $50,000.  In a later conversation, Mr.              




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