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three company checks were labeled as “grandkid cheer team”. Many
similar expenses were recorded in the company’s records as
advertising expenses.
During the years in issue, petitioners owned a Winnebago
that was used by their family when they traveled to car races.
The insurance on the Winnebago was paid by Flair Enterprises and
deducted as a business expense.
Petitioners owned land on Lake Texoma in Marshall County,
Texas, during the years in issue. The land and mobile home
located on the land are titled in the names of petitioners
personally. Utility records for the Lake Texoma property reflect
petitioner as the property owner of record. During the years in
issue, Flair Enterprises deducted utilities, taxes, and insurance
expenses related to petitioners’ Lake Texoma property.
Petitioners originally made payments on the trailer from their
personal account, but at some point started making payments out
of the Flair Enterprises account so that they could be written
off as business expenses. Petitioners also personally owned a
boat and trailer that were kept on the Lake Texoma property. The
insurance on the boat and trailer was in petitioner’s name but
was paid by Flair Enterprises and deducted as a business expense
of the company. Insurance on petitioners’ personal water craft
was also paid and deducted by Flair Enterprises for the years in
issue.
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Last modified: November 10, 2007