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Included among those checks cashed by Mrs. Haney were checks
from COPART, which were reimbursements for towing, storage, and
expenses incurred with regard to vehicles that were eventually
declared totaled by insurance companies and hauled away from
Flair Body Works. These costs reimbursed by COPART had already
been included in those deducted by Flair Enterprises on its Forms
1120-S for the years in issue. Because Flair Enterprises failed
to take the COPART reimbursements into account either as
reductions in its claimed business expense deductions or as
taxable income, it underreported its net income in the years in
issue by the total amount of COPART checks cashed by Mrs. Haney
in those years.
Also included in the checks cashed by Mrs. Haney during the
years in issue were lease reimbursement checks from Hudiburg
Chevrolet in appreciation for the high volume of business that
Flair Enterprises did with the car dealership. The monthly lease
payments made by Flair Enterprises to Hudiburg Chevrolet were
deducted as business expenses of the company, but the lease
reimbursements from Hudiburg Chevrolet back to Flair Enterprises
were not included in the income of the company to offset the
previously taken lease expense deductions. Rather than being
deposited into Flair Enterprises’ bank account and included in
income, the Hudiburg Chevrolet reimbursement checks were cashed
by Mrs. Haney and turned over to petitioner.
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Last modified: November 10, 2007