Kai H. and Susanna Lee - Page 7

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          corporation as a consultant; and in 2000 founded, and began                 
          working for, 101 Positron.                                                  
               The credibility problems grew when the Commissioner                    
          introduced time logs that each brother produced to the IRS during           
          audit and pretrial preparation.  Kai submitted his first 1999 log           
          at his appeals conference with the IRS; Ulysses produced logs for           
          both years at his IRS audit.  A side-by-side comparison shows:              
                    First log to IRS         Log introduced at trial                  
          Kai         1999 - 1125                 1999 - 2087                         
                      2000 - N/A                  2000 - 2226                         
          Ulysses     1999 - 994                  1999 - 2063                         
                      2000 - 875                  2000 - 2102                         
               If the brothers are to be believed, they each discovered               
          more than a thousand missing hours for each year between the time           
          of the audit and the time of trial.  But the logs introduced at             
          trial are packed with too much exaggeration to be believed.  Here           
          are a few examples from Ulysses’:                                           
               !    280 hours each year to close the books and prepare                
                    information about the partnership for he and his                  
                    brother to use in completing their tax returns.                   
               !    80 hours in 2000 preparing for an IRS audit because the           
                    partnership’s records were in such disarray, despite              
                    his 280 hours of work in closing the books.  (The audit           
                    of the 2000 returns, of course, did not actually take             
                    place in 2000.)                                                   
               !    24 hours to replace four miniblinds in one of the                 
                    apartments, 42 hours to paint another, and 56 hours to            
                    install a new toilet in a third.                                  







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