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company for lease expenses in monthly checks ranging from
approximately $1,200 to $1,700. Most of the Hudiburg Chevrolet
checks were cashed by Mrs. Haney, and the income from them was
not reported by Flair Enterprises.
Many of the checks cashed by Mrs. Haney were received from
B&H Supply Co. (B&H), Flair Body Works’ paint vendor. The B&H
checks will be described in detail below.
When Mrs. Haney returned from cashing the checks at the
bank, she delivered the cash received from the Hudiburg Chevrolet
lease reimbursements and certain B&H payments to petitioner. She
then divided the remainder of the cash among herself and
petitioners’ two sons.
On March 28, 2000, a check in the amount of $580.62 was
deposited in petitioners’ personal checking account. The deposit
slip for this deposit included the notation “Flair” next to the
amount of the check. During 2002, $39,000 in cash was also
deposited into petitioners’ personal checking account.
With a couple of minor adjustments, Flair Enterprises’s bank
deposits for the years in issue roughly totaled its reported
income for those years. Any checks that were cashed instead of
deposited were not included in the income of Flair Enterprises.
Agreement With B&H
Prior to and during the years in issue, B&H sold paint to
Flair Enterprises for use at its Flair Body Works body shop
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Last modified: November 10, 2007