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Petitioners operate a business selling dietary supplements
and performing certain diagnostic services with operations in
both Kansas and Texas. The business first operated as a C
corporation and later as an S corporation. During the mid-1990s,
petitioners began reporting their business activities to the
Internal Revenue Service through a number of trusts including
Total Health Center Trust, Country Rose Holding Trust, Bio-Active
Kansas Trust, and Stejskal Enterprises Trust. In a stipulation
of settled issues reached with respondent, petitioners now
concede that these trusts should be disregarded for tax purposes,
and that all income attributable to the trusts is properly
reportable by petitioners on Schedule C, Profit or Loss From
Business, of their individual return.
For the 2000 and 2001 tax years, petitioners reported the
bulk of their business activities from both the Texas and Kansas
operations under the Stejskal Enterprises Trust (SET). SET
utilized a periodic inventory system. Petitioners’ accountant,
Janet Wilkerson, prepared separate trial balances for each of the
Texas and Kansas operations. Ms. Wilkerson also made adjusting
journal entries for each of the Kansas and Texas operations.
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Last modified: May 25, 2011