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payment method. Petitioner directed Best Ever Dairy to issue one
check payable to petitioner in the amount of $10 and a second
check payable to Tadd Hoover in an amount equal to the balance
due. Petitioner also instructed Best Ever Dairy to mail both
checks to petitioner. From August 30, 1990, through December 31,
1992, Best Ever Dairy followed petitioner’s instructions.
The milk proceeds belonged to petitioner. When Tadd Hoover
received checks from Best Ever Dairy, he endorsed the checks and
gave them to petitioner. Sometime after petitioner told Best
Ever Dairy to split the milk sales checks between Harvey Hoover
and Michael Hoover or Tadd Hoover, petitioner advised Michael
that he was reporting all of the milk sales on his tax returns
and paying the taxes due on the milk sales.
Petitioner’s milk sales to Best Ever Dairy were computed by
Best Ever Dairy in terms of gross sales from which it deducted
certain expenses attributable to petitioner and remitted the net
amount to petitioner. Petitioner received milk sale proceeds
from Best Ever Dairy as follows:
Year Gross Sales Expenses Net Sales
1990 $146,416.57 $8,615.19 $137,801.38
1991 101,047.40 7,278.94 93,768.46
1992 117,274.22 8,456.73 108,817.49
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