Gerard and Audrey Kathleen Hennessey - Page 14




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               On or about June 30, 1997, Beacon submitted a second Form              
          1120S for the taxable year 1994 with “Amended” written on the top           
          of the first page (Beacon’s 1994 “Amended” return).  On Beacon’s            
          1994 “Amended” return, Beacon reported total income and total               
          deductions of $4,936 and $17,760, respectively, for a loss of               
          $12,824.  The total deductions included travel expenses of                  
          $9,887.                                                                     
               On or about March 14, 1997, Beacon submitted a 1995 Form               
          1120S with “Amended” written on the top of the first page                   
          (Beacon’s 1995 “Amended” return).7  On Beacon’s 1995 “Amended”              
          return, Beacon reported total income and total deductions of                
          $6,454 and $14,870, respectively, for a loss of $8,416.  The                
          total deductions for 1995 included travel expenses of $5,615.               
               Beacon filed a Form 1120S for the taxable year 1996.  On the           
          1996 Form 1120S, Beacon reported total income and total                     
          deductions of $10,564 and $12,540, respectively, for a loss of              
          $1,976.  For 1996, Beacon deducted travel expenses of $6,572.               
               C.  ISOA, Inc.’s Tax Returns                                           
               On or about July 10, 1995, respondent received ISOA, Inc.’s            
          Form 1120S for the 1994 taxable year (ISOA, Inc.’s 1994 return).            
          ISOA, Inc.’s 1994 return was prepared on the cash basis method of           
          accounting.  ISOA, Inc., reported gross profit of $18,749 and               


               7  Based on the record, there is no indication that Beacon             
          submitted any other 1995 return prior to Beacon’s 1995 “Amended”            
          return.                                                                     





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