Michael R. Motsko, Petitioner, and Cheryl Manns, Intervenor - Page 4

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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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