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the end of each year, Maney would send a “Dome Book”4 to Monk for
him to figure out since the whole thing was, according to Maney,
far too complicated for him to untangle himself.
Monk used Joseph Hahn, a certified public accountant, to
prepare his income tax returns for nearly twenty years. Hahn
would send Monk an organizer with the previous year’s tax return
figures, and Monk would update the organizer and return it along
with all of his annual financial records. After Hahn prepared
and reviewed the return, he sent it to Monk to sign and file.
Because Monk always included Chuck’s Place’s Dome Book in the
papers forwarded along with the organizer, Hahn assumed Monk
owned Chuck’s Place and thus reported it as Schedule C income.
From 1994, then, Monk was reporting income and losses from
Chuck’s Place on a Schedule C attached to his income tax return.
But then the Commissioner audited Monk’s 1999 and 2000 returns,
which showed net operating losses. Part of these losses was
attributable to Chuck’s Place, part to Monk’s rental properties,
and part to his other business activities. As the audit
progressed, Hahn realized that Monk wasn’t directly involved in
the management of Chuck’s Place. He and Monk then prepared
4 “Dome Book” was the witnesses’ shorthand way of referring
to a recordkeeping notebook published by the Dome Publishing
Company and widely used by small businesses to organize their
receipts and expenses.
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Last modified: March 27, 2008