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enough for him that no vendor had ever refused to do business
with them because of nonpayment.
Motsko might, however, have noticed something that was quite
unusual had he dug into those records--Manns, unbeknownst to him,
had drawn up and filed an agreement establishing herself and her
brother as partners of the Hydraulics Center business. According
to this agreement, Manns had a 51% interest and her brother the
remainder. And although the Hydraulics Center was a partnership
between Manns and her brother, the business license on file with
the State of Alaska was in her name only. Motsko, in other
words, seemed to own no part of the business where he worked. To
add to his troubles, he was also at least partially responsible
for loans he and Manns took out to run the Hydraulics Center,
because Manns drew up the paperwork for these loans and Motsko
signed them without looking too closely.
Around 1995, the IRS began auditing Motsko and Manns’s
returns. Manns let Motsko know about this; however, she said
that it was common for businesses to be audited and that it was
nothing to worry about. This case proved to be an exception.
Manns, it seems, had never filed a 1993 tax return. She finally
prepared and filed one--which Motsko signed--in October 1995.
This return reported taxes and penalties due of $11,945. While
Motsko was aware of the audit, he was not overly concerned by it,
and assumed that Manns would pay the taxes just like she would
any other bill.
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Last modified: May 25, 2011