William R.Tinnerman - Page 4

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               Petitioner has been the sole shareholder of the company                
          since 1991, and president and treasurer since approximately 1988.           
          Petitioner had significant pass-through income from the company             
          and received distributions from the company for all taxable years           
          in issue in the instant case.                                               
               Petitioner’s certified public accountant, Jon Mazer (Mr.               
          Mazer), has prepared all the corporate income tax returns for the           
          company, including those for 1999 through 2002.  Prior to 1999,             
          Mr. Mazer also prepared individual income tax returns for                   
          petitioner.  Petitioner reviewed, signed, and filed all the Forms           
          1120S, U.S. Income Tax Return for a Subchapter S Corporation, for           
          the company for all taxable years in issue.                                 
               When petitioner filed the Forms 1120S for the company for              
          taxable years 1999 through 2002 he was aware of the net income              
          reported on those returns.  Petitioner understood the tax effects           
          of having an S corporation and specifically was aware during the            
          taxable years in issue that the net profits from an S corporation           
          are passed through and taxable to its shareholders.  Prior to the           
          1999 taxable year, petitioner reported the net income of the                
          company on his individual income tax returns.                               
               Petitioner told Mr. Mazer not to prepare petitioner’s                  
          individual income tax returns starting with the 1999 taxable                
          year.  Petitioner, however, still had Mr. Mazer prepare the Forms           







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