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SCC’s bank records and for settlement statements from title
companies for the houses that had been sold by SCC.
After the revenue agent’s preliminary findings were provided
to Mr. Strong, reconstructed financial statements for SCC for the
years 1991, 1992, 1993, and 1994 were presented to the revenue
agent by Mr. Frazier, an accountant who had been engaged by Mr.
Strong.
Respondent used the financial statements provided by Mr.
Frazier as the starting point for determining SCC’s taxable
income for the years at issue. Respondent determined that SCC
was not entitled to deduct all the expenses shown on the
financial statements prepared by Mr. Frazier. Respondent also
analyzed deposits in bank account No. 893315300 to determine
SCC’s taxable income in addition to the identified deposits of
sales proceeds of houses.
The following shows the deposits to account No. 893315300
that remain in dispute1:
1Respondent conceded that a deposit of $6,000 on Dec. 4,
1990, was a loan from Mr. Strong’s father and that a deposit of
$1,000 on June 2, 1992, was a loan from Mr. Strong’s parents.
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