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and equipment, fuel, and dump fees.2 Each week, the cash
expenses regularly totaled between $5,000 and $6,000.3
Petitioner received all the cash he used for personal
spending money in the same manner as the cash he received for
cash expenses; i.e., by having Ms. Ellis cash a check from BBTS
and deliver the money to him. Petitioner did not use ATM cards
and could not withdraw currency directly from his personal
accounts.
During the IRS’s examination of petitioner’s return, Ms.
Clark and Ms. Ellis each signed an affidavit on July 8, 2002
(affidavit). The affidavits each stated that the respective
affiant did not embezzle any money from BBTS or petitioner.
Ms. White began working for BBTS in August 1999. Petitioner
and Ms. White were married during November 2000. Ms. White, on
petitioner’s behalf, investigated BBTS’s alleged theft loss. Ms.
White does not have any bookkeeping training or experience either
in general or with the specific accounting software BBTS used.
Ms. White prepared an analysis of the alleged theft loss at BBTS.
Although Ms. White could not distinguish an embezzled check from
a nonembezzled one, the original analysis she prepared claimed
2Dump fees are fees paid by petitioner to dispose of the
wood removed from a customer’s property, as petitioner was not
allowed to leave the debris from a customer’s job for regular
garbage collection.
3For example, BBTS deducted $111,600 in dumping fees alone
in 1997, $133,330 in 1998, $204,588 in 1999, and $43,934 in 2000.
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Last modified: May 25, 2011