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total deductions of $10,384 for 1994. ISOA, Inc.’s total
deductions included travel expenses of $8,228.
On or about September 23, 1996, respondent received a 1995
Form 1120S (ISOA, Inc.’s 1995 return) prepared by Edward Chui
(Mr. Chui), the corporation’s certified public accountant. ISOA,
Inc.’s 1995 return was prepared on the cash basis method of
accounting. The 1995 Form 1120S reported total income of
$191,383 and total deductions of $170,679, for ordinary income of
$20,704. Deductions included “Royalties Paid To Investors” of
$104,860 and travel expenses of $21,069. On a balance sheet
attached to ISOA, Inc.’s 1995 return, the corporation listed
“Advances From Others” of $195,000 under “Other Current
Liabilities”. On the Statement of Assets, Liability & Equity for
the taxable year ending December 31, 1995, ISOA Inc. also
reported a current liability for “Unearned Income (Escrow)” of
$195,000.
On August 16, 1996, ISOA, Inc., terminated its S corporation
election and was thereafter a C corporation.
On or about September 13, 1996, respondent received an
amended 1994 Form 1120S for ISOA, Inc., for the taxable period
beginning August 18, 1994, and ending December 31, 1994, (ISOA
Inc.’s 1994 amended return) prepared by Mr. Chui. ISOA, Inc.’s
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Last modified: November 10, 2007