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In addition, neither Monk nor Maney understood the
significance of Monk’s submission of the Dome Book to his
accountant and his reporting the business on his tax return. We
believe them to be sincere, if completely mistaken, when they say
they didn’t think it mattered where the money was reported as
long as it was reported somewhere. Although both have long
practical experience as businessmen, neither has the formal
education to understand the complexities of the Code--Monk has no
training past high school and Maney left school after the fifth
grade. And that’s why Monk had a professional accountant, Hahn,
take care of his somewhat complicated tax return each year.
Unfortunately, Hahn misunderstood Monk’s involvement with
Chuck’s Place. When Monk said that he bought a bar, he meant he
had bought the building, but Hahn reasonably thought Monk meant
that he was running the bar himself. When the audit began, Hahn
looked more closely into Monk’s involvement--or, rather, lack of
involvement--in Chuck’s Place and saw the mistake immediately.
It was this epiphany--not the expected tax consequences of the
audit--that moved Hahn to amend Monk’s tax returns for the
previous three years and change the way Chuck’s Place was
reported on his later tax returns. In other words, we find the
inclusion of Chuck’s Place on Monk’s Schedule C was a mistake
rather than an admission--a mistake that was corrected as soon as
it was discovered.
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Last modified: March 27, 2008