DocketNumber： Docket No. 46185-86
Citation Numbers： 61 T.C.M. 1812, 1991 Tax Ct. Memo LEXIS 76, 1991 T.C. Memo. 51
Judges： PARR
Filed Date： 2/11/1991
Status： Non-Precedential
Modified Date： 11/20/2020
*76
MEMORANDUM FINDING OF FACTS AND OPINION
Respondent determined deficiencies in and additions to petitioners' joint Federal income taxes as follows:
| Additions to Tax | |||
| Year | Deficiency | Section 6653(b) Section 6654(a) | |
| 1977 | $ 108,999.00 | $ 54,499.50 | $ 3,878.57 |
| 1978 | 604,924.70 | 302,462.35 | 19,311.18 |
| 1979 | 1,102,594.23 | 551,297.12 | 46,092.03 |
Respondent determined a separate deficiency of $ 2,436,382.86 and additions *77 to tax under
After concessions by the parties, the issues remaining for decision are: (1) Whether petitioners failed to report substantial amounts of gross receipts during the years in issue; (2) whether petitioners are entitled to expense deductions in excess of those respondent allowed; (3) whether petitioners are liable for the addition to tax for fraud under
For clarity and convenience we have combined, in major part, our findings of fact and opinion herein because of the mass of financial and documentary data contained in the record.
Some of the facts have been stipulated and are so found. The stipulation of facts and accompanying exhibits are*78 incorporated herein by this reference.
Petitioners resided in Mesa, Arizona, at the time they filed their petition in this case.
Petitioners conducted business during the years 1977, 1978, 1979, and 1980 through an organization called Tax Information Center (TIC), which may appropriately be described as an income tax, estate planning, and financial consulting firm. TIC operated as Mr. Fry's sole proprietorship and was headquartered in buildings on part of 120 acres of land petitioners owned near New Concord, Ohio. *79 Law Center, and he has taken courses toward earning a masters of business administration at George Washington University. However, he has not received a graduate degree from any of these institutions.
Throughout his education, Mr. Fry never enrolled in a course involving Federal income taxation. Even so, he was variously identified in TIC promotional materials as "one of the nation's most creative year-round income tax and estate planning specialists"; a "tax accountant and multi-millionaire"; a "highly eloquent lecturer who has explained our nation's complicated tax laws in everyday, easy to understand words"; a "leading tax consultant"; and a "multi-millionaire tax specialist."
TIC marketed its services through an aggressive self-promotion campaign featuring free seminars at which Mr. Fry was the featured speaker. Petitioners scheduled seminar dates at motels or hotels in various towns and cities and promoted them through advertisements in local newspapers. The newspaper advertisements announced that Mr. Fry, as a noted tax expert, would be speaking on the subjects of tax savings and financial planning. In addition, he would appear on local talk shows to discuss theories *80 of taxation and estate planning and to further publicize the upcoming seminar.
During the seminars, Mr. Fry described the tax burden borne by the average wage-earning taxpayers and self-employed people. He identified the benefits available through the use of estate planning devices, particularly involving revocable trusts, and promoted TIC's services to the audience. Mr. Fry conducted interviews after the seminars where he and his confederates sought to contract with individuals for TIC's services. He also offered books and other publications he had written for sale through another Fry-owned entity, "Let the People Know" Law Book Store.
Mr. Fry authored books with the following titles and copyright dates: "How to Disinherit the IRS & Probate Court" (copyright 1973, 1975, 1977, 1978 and 1979); "Pay No Income Tax Without Going to Jail" *81 (copyright 1975 and 1978); "How to Cut Your Taxes in Half By Incorporating Your Job or Business" (copyright 1976 and 1978); "Our Lady of Perpetual Deductions" (copyright 1977); and "Blood Taxes at Harvest Time" (copyright 1977). *82 received a percentage of the fees collected from TIC clients solicited by the representative.
Mrs. Fry attended high school through the eleventh grade, but has a general equivalency degree (ged). She worked with Mr. Fry at TIC from its inception through 1980 and was described as TIC's business manager and publicity director. However, she received no direct compensation for her services to TIC during the years in issue. Her duties included assisting in the preparation and maintenance of internal books and records.
Petitioners made a practice of opening a separate bank checking account for most of the entities (or trusts) they created, and each had signatory authority on the checking accounts they established. Mrs. Fry was in charge of overseeing the banking transactions in each checking account of petitioners' enterprises. The deposits were handled by Mrs. Fry or TIC office personnel under her supervision. Mrs. Fry prepared the checks and she signed the majority of them, often at her husband's direction. During 1977 through 1980, Mrs. Fry signed thousands of checks drawn on accounts for TIC and other entities petitioners controlled.
TIC was the nucleus of petitioners' operations. *83 However, during 1977 through 1980, petitioners also conducted various other business activities and promotions through subentities. As previously alluded to, "Let the People Know" Law Book Store (LBS) was a clearinghouse for books and publications authored by Mr. Fry.
Petitioners created Orlando Advertising to obtain advertising agency discounts for their promotion of TIC. Petitioners created Family Health & Improvement Society (FHIS) in the form of a trust. FHIS operated as a mail order ministry whereby clients of TIC had the opportunity to form their own church as a tax avoidance device. As an adjunct to FHIS, petitioners created a legal services plan to benefit the members of FHIS and named it Group Legal Plan (GLP). Whenever trusts were prepared for TIC clients, the trusts were prepared by GLP attorneys. *84 GLP attorneys were independent lawyers practicing in Pennsylvania and Arizona who were paid for their services through TIC. FRY FAMILY TRUSTS In 1973 Mr. Fry formed the Fry Family Trust, a grantor trust. In 1976 petitioners formed a second grantor trust as a successor to the Fry Family Trust called the MLJ Trust. The two trust documents are identical except for the name of the trust created. Mr. Fry was the trustee and sole income beneficiary of the Fry Family Trust and the MLJ Trust. Mrs. Fry was the*85 successor trustee for both trusts. In 1977 and the years that followed, petitioners used the MLJ Trust exclusively. Beginning in 1978, petitioners encouraged investors and clients of TIC to invest in Precious Metals Holding Company, a Trust (Precious Metals). Precious Metals was designed to be an investment vehicle for Mr. Fry and certain of his clients. Mr. Fry served as the trustee of the Precious Metals trust. By 1979, petitioners began to actively prepare and present other investment opportunities to TIC clients. For each syndicated investment project marketed by Mr. Fry, a trust was formed making him the sole trustee. A master trust agreement was created specifying the rights of the parties, a copy of which was signed by and given to each investor. For each syndication approximately 20 to 30 duplicate original trust documents existed. Each trust operated in a manner identical to that of a limited partnership, with Mr. Fry as the general partner and the investors providing the money as limited partners insulated from liability and from authority to make decisions on behalf of the enterprise. Separate bank accounts were opened for each syndicated trust with Mr. and Mrs. Fry the authorized signatories. In almost every syndicated trust he established, Mr. Fry obtained a specified portion of beneficial interest in exchange for past and future*87 services. Some of the trust agreements also provided for consulting or managing fees to be paid to Mr. Fry in addition to the beneficial interests allocated to him. The amount of beneficial interest obtained and management fees varied among the trust agreements. The MLJ Trust nominally owned the beneficial interests obtained by Mr. Fry. The size of the syndicated offerings ranged from $ 100,000 to $ 1,520,000 The capital solicited from investors was applied as the down payment on properties to be owned and operated by the syndication. In some cases a portion of the solicited capital was also applied as payment of Mr. Fry's one-time management, consulting, or organizational fee. As a rule, petitioners never made any cash payments or contribution to any syndicated activity in exchange for receipt of the beneficial interest from any syndicated activity. Investment opportunities usually were heavily tax advantaged. Each syndicated trust was heavily promoted by Mr. Fry to TIC clients. He used the name "Positive Cash Flow Network" as a marketing strategem for eliciting investments in the syndications. The advertisements were often glowing in terms of the profit prospects of the*88 particular syndication. For 1979 and 1980, however, all fiduciary income tax returns (Forms 1041) filed by Mr. Fry for each of the syndicated entities reflected a loss from operations. Petitioners provided their accountant Ronald Snook (Mr. Snook) with information on the income and expenses of each of the syndications for which Mr. Fry was trustee. Mr. Snook took the information provided by Mr. Fry and prepared income statements and balance sheets as well as drafts of fiduciary income tax returns. Petitioners, rather than original documents, were the source of information for the majority of fiduciary returns that were filed for the syndicated entities. In 1979 petitioners incorporated Freedom Fuel Corporation (FFC). Mr. Fry organized FFC in response to the oil crisis of the late 1970's with the stated purpose "to locate, find, and develop any and all forms of energy." Even though FFC never filed an election to be treated as an S corporation, Mr. Fry filed the FFC returns on Form 1120-S. An investor with FFC would buy a distributorship, paying no cash or a variable small down payment and sign a 30-year recourse promissory note. The fee for the*89 license was $ 20,000 in 1979 and $ 25,000 in 1980. In exchange, the investor received a license agreement expiring December 31 of the year of issuance. The license gave the investor the right to distribute gasohol and any other products of FFC within the distributorship area granted to the investor. Gasohol production facilities were never constructed by FFC nor was any gasohol produced or made available to those who held FFC distributorship licenses. The products made available to FFC licensees consisted of compressed coal bricks, blue prints for alcohol stills and an energy efficient home, booklets, pamphlets, and hydrometers to measure alcohol and sugar concentration in the distillation process. In 1979, FFC materials advertised that an 8 to 1 tax writeoff was available to the investor who paid $ 2,500 down and signed a recourse promissory note for a total investment of $ 20,000. Many of the distributorships were sold to investors late in December 1979 and 1980 giving the investor only a few days on his annual license agreement. Renewal of the license required signing another promissory note. Petitioners or their agents on at least one occasion backdated a license agreement*90 to generate additional deductions for a client even though the end of the taxable year had passed. FFC issued foreign and domestic licenses for the distribution of FFC products. The representation contained in each license agreement was that the license was exclusive. However, there was no rhyme or reason behind the selection of geographic areas of the foreign or domestic licenses. The same geographic areas were often sold several times to the same or different investors for the same year. It was not unusual for petitioners to sell a license agreement with no geographic area designated. In addition, FFC licenses were granted to ten of the syndicated trusts increasing the losses claimed by the trusts for 1979 and 1980. The syndicated trust entities and FFC distribution fees included in the claimed losses are as follows: 1979 1980 Precious Metals Holding Capital Appreciation Trust Co., A Trust (1978) Columbus Game Arcade, A Trust Casa Serena Trust I Energy Lodging Trust Casa Serena Trust II Innovative Investors Trust Central Ohio Trust #1 Jordan Estates, A Trust Hamilton Road Partnership, Fantasyland Trust I A Trust (1978) Orchard Lakes Estates Trust La Oficina Trust Sports Paradise Recreational Lake Estates, A Trust Vehicle Park, A Trust Lake Middlebourne Estates, A Trust Tall Timbers Trust Tradewinds Trust Number of FFC DEDUCTION TRUST Distributorships 1979 1980 La Oficina 3 $ 60,000 0 Lake Estates 12 $ 240,000 0 Central Ohio #1 12 $ 240,000 0 Casa Serena I 5 $ 100,000 0 Casa Serena I & II 9 0 $ 225,000 Jordan Estates 6 0 $ 150,000 Sports Paradise RV Park 1 0 $ 25,000 Capital Appreciation 7 0 $ 175,000 Energy Lodging 5 0 $ 125,000 Fantasyland 12 0 $ 300,000 Total 72 $ 640,000 $ 1,000,000
*91 In 1986 Mr. Fry was indicted by a Federal grand jury on a 17-count indictment relating to his control and marketing of FFC franchises. He pled guilty to the first count of the indictment which charged him with criminal "conspiracy to defraud the United States by impeding, impairing, obstructing and defeating the lawful Government functions of the Internal Revenue Service in the ascertainment, computation, assessment and collection of income taxes."
The relevant factual allegations contained in the first count of the indictment charged that Mr. Fry induced individuals to purchase FFC distributorships by promising tax deductions in excess of the required investment. The FFC distributorship purchases were financed by a small down payment, or no down payment, with the balance secured by a 30-year recourse promissory note which Mr. Fry represented would not be handled as a legal enforceable obligation. He used FFC to create tax deductions and prepared tax returns for individuals claiming the FFC deductions in them which served to defraud the United States.
Mr. Fry formed Leverage Leasing Corporation (LLC) in 1979 to aid him in obtaining money from*92 investors. Investors "deposited" cash and were promised a return of interest at money market rates. Mr. Fry loaned the cash obtained from investors to other Fry controlled entities suffering a cash flow deficit. In essence LLC operated as Mr. Fry's personal loan company.
Petitioners filed their 1974 and 1975 joint Federal income tax returns on September 10, 1979. They listed "financial planner" as their occupations and reported a loss of $ 17,510 and $ 2,080 on their 1974 and 1975 returns, respectively.
Petitioners filed their 1976 joint Federal income tax return on June 24, 1977, reporting a $ 39,784 loss. Mr. Fry's occupation was listed as "business owner" and Mrs. Fry's occupation was listed as "housewife."
Petitioners entered into a stipulated decision in a previously docketed case in this Court regarding their 1974, 1975, and 1976 taxable years. They agreed they had understated their tax liabilities, without regard to any additions to tax, in the amounts of $ 2,893.31, $ 10,701.75, and $ 740.47, respectively.
Petitioners filed their 1977 joint Federal income tax return on December 27, 1978. They filed their 1978 and 1979 joint returns on*93 September 18, 1980. They did not file a return for 1980. They listed "financial planner" as their occupation on the returns they filed. They did not make estimated tax payments or pay any self-employment taxes for any of the years at issue. The entries on the returns regarding income are as follows:
| Form 1040 Line Description | 1977 | 1978 | 1979 |
| Capital gain (loss) | $ (487.00) | ||
| Pensions, annuities, rents, | |||
| partnerships, estates, | |||
| trusts, etc. | $ (18,451.00) | 168,920.00 | (422,119.00) |
| Net operating loss carryforward | (60,615.00) | ||
| Taxable income | 0 | 107,818.00 | 0 |
| Tax liability | 0 | 21,605.00 | 0 |
| Investment tax credit | $ 5,212.00 | 21,605.00 | |
| Tax due | 0 | 0 | 0 |
The most significant entry on petitioners' returns for all years is the loss from partnerships and fiduciaries traceable to the MLJ Trust tax returns. The MLJ Trust returns reported the following:
| Item Description | 1977 | 1978 | 1979 |
| Income (loss) from partnerships $ (5,819) | $ (4,130) | $ 3,765 | |
| Income (loss) from fiduciaries | (68,158) | (512,961) | |
| Gross profit from trade or business | 25,340 | 0 | 0 |
| Net capital gain (loss) | 1,400 | (974) | 0 |
| Business loss carryforward | (38,786) | 0 | 0 |
| Interest income | 150 | 0 | 0 |
| Other income | 0 | 267,083 | 88,596 |
| Charitable contribution | (736) | (25,875) | 0 |
| Interest expense | 0 | 0 | (1,039) |
| Tax expense | 0 | 0 | (480) |
| Total | $ (18,451) | $ (167,946) | $ (422,119) |
Petitioners treated the majority of the persons performing services for their businesses as independent contractors rather than as employees for Federal tax purposes. An individual who expected to receive a Form W-2, but did not, complained to the IRS.
In May 1977 Revenue Agent Olin Melaragno was assigned to investigate the complaint. He sent a letter to Mr. Fry scheduling an interview. Two or three days before the interview, Mr. Fry's secretary called Mr. Melaragno and cancelled the appointment. During a telephone conversation two months later, Mr. Fry stated that he "would not respond to any efforts to provide [Agent Melaragno] with any information related to any tax matters [Fry] might have."
Thereafter, Mr. Melaragno requested a routine computer search of petitioners' income tax returns which revealed that, at that time, petitioners had not filed returns for their 1974, 1975, and*95 1976 tax years. He then changed the scope of his examination from employment tax to income tax liability.
In September 1977 Mr. Melaragno again contacted Mr. Fry who told him again that he would not cooperate with any IRS investigation. Mr. Melaragno then received approval to resort to indirect methods of determining petitioners' income after discussing Mr. Fry's noncooperative attitude with his supervisors.
Mr. Melaragno first attempted to use the net worth method to verify petitioners' income tax liability. However, that approach proved unsuccessful because he was not sure that he had all the information necessary to calculate a beginning net worth. Accordingly, he resorted to the bank deposits method to verify petitioners' correct income.
On July 9, 1980, Mr. Melaragno informed petitioners by mail that he was expanding his examination to include their 1977 and 1978 income tax returns. He scheduled an interview and requested petitioners produce their books and records to support their 1977 and 1978 tax returns. Petitioners refused the request.
On October 9, 1980, Mr. Melaragno informed petitioners by mail that he was expanding his examination to include their 1979 income*96 tax liability. He scheduled another interview and requested petitioners bring their books and records to support their 1979 return. He made a second request for petitioners to produce their records for their 1977 and 1978 tax returns. Petitioners refused all requests and failed to cooperate.
Mr. Melaragno then transferred the case to the Criminal Investigation Division of the IRS. Special Agent Dennis O'Dell was assigned to the investigation and Mr. Melaragno continued to assist him.
In an effort to determine petitioners' income from 1977 through 1980, Agent Melaragno and Special Agent O'Dell were required to reconstruct petitioners' income through third party records. Mr. O'Dell compiled a list of entities that appeared to be related to Mr. Fry or through which he conducted business. Mr. Melaragno surveyed banks located near petitioners' home and surrounding areas to locate their bank accounts.
On September 9, 1981, Mr. O'Dell visited a TIC promotional seminar in Cleveland, Ohio, and served Mr. Fry with 56 summonses calling for the production of books and records for petitioners' businesses. Included were summonses for records of TIC, Leverage Leasing, and FFC. Summons*97 enforcement proceedings ensued in the United States District Court after Mr. Fry failed to comply with the summonses served by Mr. O'Dell. The summons enforcement proceedings for the 1977, 1978, and 1979 tax years commenced as early as March 9, 1982, and continued into 1983.
Mr. O'Dell caused summonses to be served upon TIC clients, Mr. Fry's marketing associates, brokerage houses with whom Mr. Fry did business, and banks where petitioners had checking accounts. Mr. Fry instructed the banks not to comply with the summonses and summons enforcement proceedings were required to obtain compliance. Frequently, Mr. Fry instructed other summoned parties not to comply with the summonses and additional summons enforcement proceedings ensued.
Mr. Melaragno eventually received the summoned third party records, and found that some of the bank records were not available or not readable. The banks were missing statements and other documentation. When Agents Melaragno and O'Dell analyzed the bank records received from the Quaker City National Bank, they discovered that many checks had been written in an ink that did not photocopy. Petitioners' use of "nonphotocopyable" ink hindered the investigation.
*98 Nevertheless, upon receiving the incomplete information from the banks, Mr. Melaragno began looking for items of deposits in the various accounts. He listed all of petitioners' deposits that he was able to verify from the bank documents on his worksheets. He included in his analysis only those items of income that he could establish by the documents he was able to obtain.
After listing all of the deposit amounts, Mr. Melaragno traced items which he believed were nontaxable transfers (such as transfers, loans, inheritances, and gifts) from other nonsyndication bank accounts, *99 Account Holder 1977 1978 1979 1980 TIC, Inc. (QCNB) $ 104,197.57 $ 991,950.90 $ 1,487,302.76 $ 882,550.71 MLJ Trust 7,347.70 100,297.03 88,389.31 956,672.15 Orl. Adv. 13,218.52 6,716.98 19,565.14 58,835.07 Fam. H & I.S. 5,769.85 19,901.00 27,222.50 17,678.06 Law Book Store 104,092.15 80,570.50 10,405.20 0.00 Talk Magazine 750.50 0.00 0.00 0.00 Energy Store 1,900.00 0.00 0.00 0.00 Discount Development 286.95 0.00 0.00 0.00 LBS0 (QCNB) 16.75 0.00 0.00 0.00 Phillip Fry 0.00 10,000.00 0.00 0.00 GLP 0.00 2,000.00 5,464.44 27,454.41 TIC (BONB) 0.00 0.00 40,126.02 58,018.90 TIC (VNB) 0.00 0.00 939.30 18,980.00 TIC Office Account 0.00 0.00 51,016.68 38,333.84 Guernsey Lumber 0.00 0.00 0.00 96,203.30 MLJ/Merrill Lynch 0.00 0.00 0.00 705,029.97 Amusement Concepts 0.00 0.00 0.00 42,500.00 Increasing Innovative Income Magazine 0.00 0.00 0.00 22,547.53 Cashier's Checks 1,000.00 19,222.00 496,691.10 131,325.16 Total Deposits $ 238,579.99 $ 1,230,658.41 $ 2,227,122.45 $ 3,056,129.16 Plus interest 0.00 0.00 0.00 10,284.00 Income $ 238,579.99 $ 1,230,658.41 $ 2,227,122.45 $ 3,066,413.16
*100 Throughout the course of Mr. Melaragno's investigation, which lasted from May of 1977 until May of 1984, petitioners refused to cooperate in the investigation of their income tax liability. UNREPORTED GROSS RECEIPTS
The focal point of this case centers around respondent's bank deposit schedules on which his notices of deficiency are based. Petitioners have adopted the deposit information contained in them*101 to prepare their own income schedules in their attempt to illustrate nontaxable deposits.
Mrs. Fry prepared and petitioners submitted summary schedules purporting to show transfers between their related entities and syndicated entities they controlled. They attached cancelled checks and check stubs for some, but not all, of the transfers they claim in their schedules. We have ignored the check stubs because they lack third party verification of the amount and existence of payment. Furthermore, petitioners have not established that their internal accounting controls are adequate to rely on the check stubs as sufficient competent evidence of payment.
In addition, we find that petitioners' schedules are unreliable because of the unsubstantiated transfers and obvious errors contained therein. For example, several of their schedules include checks claimed as nontaxable transfers that are not included in respondent's deposit schedules. We have disregarded these claimed nontaxable transfers because they were not previously included in petitioners' income. Treating them as nontaxable transfers will result in a double exclusion of income. Some of petitioners' other schedules misrepresent*102 the source of deposits. *103 those bank accounts with disputed transfers and discuss them,
Petitioners make the blanket assertion that all of the funds transferred were "transfers and loans," and are therefore nontaxable receipts. They appear to be laboring under the misconception that merely because funds were transferred from a syndicated entity to a nonsyndicated entity they controlled, the transfer is a nontaxable receipt of funds. This view is too simplistic and ignores the purpose for the transfer. The checks petitioners submitted prove only the source of deposits and the amount transferred, not the purpose for the transfer. They must further prove that the receipt of the funds is nontaxable by the purpose of the transfer.
Petitioners rely heavily on their testimony that the interaccount transfers are loans. We need not, and do not, accept such self-serving testimony without substantiating documentation.
Although not conclusive, bank deposits are prima facie evidence of income and respondent need not prove a likely source of that income.
Respondent treated deposits to the TIC, TIC Office Account, Orlando Advertising, Family Health & Improvement Society, Group Legal Plan, and MLJ Trust bank accounts as taxable gross receipts in his notice of*105 deficiency. In theory, transfers between these entities must be excluded from the total deposits to prevent double inclusion of income; once for the original deposit and secondly for the transfer.
This theory breaks down in the case where, for example, one entity transfers funds to another and claims the transfer as a business expense. The second entity then claims the funds received as a nontaxable transfer when in reality it is a payment for goods and services and thus taxable income to the second entity. In this scenario, petitioners receive a double deduction for the same expense.
At the risk of allowing petitioners a double deduction, we find that the identified transfers between petitioners' wholly owned entities are nontaxable transfers. The risk of allowing double deductions is minimal because respondent disallowed business deductions for the transfers.
Petitioners argue that Family Health and Improvement Society (FHIS) and Group Legal Plan (GLP) bank account deposits should not be included in their income because they are separate entities. Petitioners did not file tax returns for either FHIS or GLP. Membership in FHIS was "free" upon signing the TIC client agreement. *106 See appendix A, par. 1.
The client contract contained a provision which permitted the client to be represented by an attorney from the Group Legal Plan of FHIS. See appendix A, par. 1. The GLP lawyers were paid by TIC to do tax planning, drafting of revocable trusts for estate planning purposes, and client representation before the IRS in the event TIC planning was challenged. TIC clients received tax advice from GLP attorneys and were required to implement at least 90 percent of GLP tax planning suggestions to be covered under TIC's ten-times-money-back guarantee of results. Appendix A, par. 3.
We doubt FHIS and GLP would have independent existence without TIC's support. Further, we find the testimony that people other than TIC clients were members of FHIS highly suspect. By petitioners' failure to introduce testimony of even one member of FHIS who was not a TIC client, we infer that there were none.
Moreover, *107 the Government is not required to apply the tax laws in accordance with the form employed by the taxpayer where that form is a sham or is inconsistent with economic reality.
Notwithstanding the formal documents filed with the State of Ohio, we find that FHIS and GLP were integrated and interrelated into TIC's operations to the extent that their separate existence is a sham. To conclude otherwise would exalt form over economic substance. Accordingly, we hold that respondent properly included the FHIS and GLP bank accounts in determining petitioners' income.
A fundamental principle of income tax law is that taxable income is computed on the basis of an annual accounting period.
The following table categorizes petitioners' bank*108 deposits for 1977.
| BANK ACCOUNTS | |||||
| Deposit | MLJ Trust | TIC | LBS | Orl. Adv. | Total |
| Source: | |||||
| Undocumented | $ 7,227.70 | $ 103,612.57 | $ 103,994.15 | $ 2,057.52 | $ 216,891.94 |
| TIC (QCNB) | 20.00 | -- | -- | 3,880.00 | 3,900.00 |
| LBS | |||||
| (Central) | 100.00 | 585.00 | -- | 7,281.00 | 7,966.00 |
| Orlando Adv. | -- | -- | 110.00 | -- | 110.00 |
| Total | |||||
| Deposits | $ 7,347.70 | $ 104,197.57 | $ 104,104.15 | $ 13,218.52 | $ 228,867.94 |
Petitioners have failed to introduce any evidence of transfers into the following bank accounts and are deemed to have conceded, under Rule 142(a), that the following deposits represent taxable income (See table,
| Bank Account | |
| Family Health & Improvement Society | $ 5,769.85 |
| Energy Store | 1,900.00 |
| Discount Development/(Quickprint) | 286.95 |
| Law Book Store (QCNB) | 16.75 |
| Talk Magazine | 750.50 |
| Total | $ 8,724.05 |
Petitioners also failed to present any documentary evidence for the source of the single cashier's check in the amount of $ 1,000.00 made out to "Phillip Fry" that is included in respondent's bank account analysis. See
After tracing the checks to respondent's schedules, we find the following to be the sources of 1978 deposits in petitioners' bank accounts.
| BANK ACCOUNTS | |||
| Deposit Source: | Orlando Adv | FHIS | MLJ Trust |
| Undocumented | $ 6,363.79 | $ 16,001.00 | $ 16,898.80 |
| TIC (QCNB) | 12,400.00 | 3,900.00 | 3,498.50 |
| FHIS | 450.00 | - - | 1,300.00 |
| LBS | 3,960.00 | - - | 170.00 |
| MLJ Trust | - - | - - | - - |
| Lake Middlebourne | - - | - - | 79,950.00 |
| Phillip Fry | - - | - - | - - |
| Total | $ 23,173.79 | $ 19,901.00 | $ 101,817.30 |
| Deposit Source: | TIC | Total |
| Undocumented | $ 975,308.62 | $ 1,014,572.21 |
| TIC (QCNB) | - - | 19,798.50 |
| FHIS | - - | 1,750.00 |
| LBS | - - | 4,130.00 |
| MLJ Trust | 13,000.00 | 13,000.00 |
| Lake Middlebourne | - - | 79,950.00 |
| Phillip Fry | 9,950.00 | 9,950.00 |
| Total | $ 998,258.62 | $ 1,143,150.71 |
The undocumented deposits constitute taxable gross receipts to petitioners. The deposits with TIC (QCNB), FHIS, LBS, *110 and MLJ Trust listed as their source are considered nontaxable transfers to prevent double inclusion of income. The deposit from Lake Middlebourne was in payment of a ground lease and constitutes gross rental receipts to petitioners. Sec. 61;
The deposit schedules for Phillip Fry's account show that $ 500.00 was deposited in that account on October 10, 1978, and $ 1.50 was deposited on December 13, 1978. Respondent's schedules do not contain the balance in that account at the beginning of the year. Petitioners have not offered any evidence of the account balance at the beginning of 1978.
Appendix B item numbers 105-1 and 105-2 comprise the transfers listed above from Phillip Fry's account to TIC's bank account. These two checks were honored by the bank on October 10, 1978, and October 20, 1978, respectively. Conceivably, the October 10, 1978, deposit of $ 500.00 could have been paid out as part of the check listed as appendix B item number 105-1. Because the other deposit in the amount of $ 1.50 was made after the checks were honored, we find there were deposits of at least $ 9,451.50 into Phillip Fry's account. Petitioners have not documented*111 the source for deposits into this account so we conclude that the $ 9,451.50 represents taxable gross receipts.
Petitioners do not contest that the $ 80,570.50 deposited in the Law Book Store account represents income or the amount of the deposits. See table
Petitioners have established TIC as the source for all but one of the cashier's checks included in respondent's schedule for 1978. (See
Based upon the foregoing, we conclude that petitioners received $ 1,187,544.21 in taxable gross receipts during 1978. *112
After tracing petitioner's checks to respondent's schedules, we find the source of deposits to be as shown on the following page.
The undocumented deposits are taxable receipts. The deposits from TIC (QCNB), Law Book Store, TIC Office Account, and FHIS bank accounts are nontaxable receipts.
The transfer from Tall Timbers to TIC is to reimburse TIC for closing costs paid by TIC for the purchase of the mobile home park owned by the Tall Timbers syndication. Accordingly, the transfer does not represent taxable cash receipts.
| 1979 | ||||
| BANK ACCOUNTS | ||||
| Group | Orlando | TIC Office | ||
| Deposit Source | TIC (QCNB) | Legal Plan | Advertising | Account |
| Undocumented | $ 1,075,828.33 | - - | $ 11,665.14 | $ 6,816.68 |
| TIC (QCNB) | - - | $ 13,414.44 | 20,400.00 | 11,000.00 |
| Law Book Store | - - | - - | 250.00 | 4,000.00 |
| TIC Office Account | 15,000.00 | - - | 4,000.00 | - - |
| FHIS | - - | 4,600.00 | - - | 3,000.00 |
| Tall Timbers | 5,785.41 | - - | - - | - - |
| Freedom Fuel Corp | 17,052.05 | - - | 10,800.00 | - - |
| Leverage Leasing | - - | - - | - - | - - |
| Hamilton Rd. | 2,588.62 | - - | - - | - - |
| La Oficina | 15,000.00 | - - | - - | - - |
| Lake Estates | 8,000.00 | - - | - - | - - |
| Precious Metals | 51,769.41 | 4,300.00 | - - | 10,000.00 |
| Central Ohio Trust #1 | 10,000.00 | - - | 900.00 | - - |
| Lake Middlebourne | 137,328.95 | - - | - - | 1,200.00 |
| Casa Serena I and II | 161,950.00 | - - | 5,000.00 | 30,000.00 |
| Total | $ 1,500,302.77 | $ 22,314.44 | $ 53,015.14 | $ 66,016.68 |
| MLJ | ||
| Deposit Source | Trust | Total |
| Undocumented | $ 9,409.31 | $ 1,103,719.46 |
| TIC (QCNB) | 2,000.00 | 46,814.44 |
| Law Book Store | - - | 4,250.00 |
| TIC Office Account | 480.00 | 19,480.00 |
| FHIS | 1,440.00 | 9,040.00 |
| Tall Timbers | - - | 5,785.41 |
| Freedom Fuel Corp | - - | 27,852.05 |
| Leverage Leasing | 18,200.00 | 18,200.00 |
| Hamilton Rd. | - - | 2,588.62 |
| La Oficina | - - | 15,000.00 |
| Lake Estates | - - | 8,000.00 |
| Precious Metals | - - | 66,069.41 |
| Central Ohio Trust #1 | - - | 10,900.00 |
| Lake Middlebourne | - - | 138,528.95 |
| Casa Serena I and II | 59,300.00 | 256,250.00 |
| Total | $ 90,829.31 | $ 1,732,478.34 |
Mr. Fry's accountant Ronald Snook stated in a sworn affidavit that Freedom Fuel Corporation expenditures were paid to or on behalf of Mr. Fry. When Snook questioned the expenditures, Mr. Fry instructed Snook to "treat them as management or consulting fees rather than as wages for withholding purposes or as dividends." FFC expensed $ 405,073 in management and consulting fees on its tax return for fiscal year ending September 30, 1980. Accordingly, we view the transfers from Freedom Fuel as taxable gross receipts.
Mr. Fry formed Leverage Leasing Corporation to operate as a money market fund for TIC's clients. *114 According to Fry, a ledger card would be prepared for each client investing money. A promissory note would be prepared for the deposit received. LLC in turn would transfer the money to one or more syndicated or nonsyndicated activities agreeing to pay interest for the money provided. Accordingly, the transfers from LLC are loans and nontaxable receipts.
At the beginning of 1979, the Hamilton Road Partnership's balance sheet shows a $ 31,672.86 capital balance for Mr. Fry before subtraction of previously distributed losses of $ 68,157.90. The partnership liabilities as of January 1, 1979, include a mortgage of $ 550,000. We find no indication in the record of whether the partnership mortgage is a recourse or nonrecourse loan. Those partnership records for 1979 reflect a $ 99,501 capital contribution made during the year by Mr. Fry consisting of Tax Information Center expenditures in the amount of $ 95,551.00 and a $ 3,950 cash contribution.
We have traced $ 21,183.24 of the TIC expenditures to the TIC Office Account. These expenditures were not expensed by TIC. It is apparent that some TIC expenditures were to be repaid and others were not. The transfer from Hamilton Road*115 Partnership identified above was recorded on the partnership's books as a repair and maintenance expense paid by cash. The $ 2,588.62 transfer identified was substantiated by documents indicating repayment was to be made. Accordingly, we conclude the $ 2,588.62 transfer to TIC is a loan repayment and does not consist of taxable gross receipts.
La Oficina reported $ 37,500 as management or consulting fees expense in 1979. Assuming petitioners maintained a double entry set of books, it is logical to assume the credit side of this accounting entry would be either to credit the cash account or an account payable to Mr. Fry. The accounting records do not record an account payable to Mr. Fry, TIC, or the MLJ Trust. We therefore consider the $ 15,000 transfer identified to be taxable gross receipts as part payment of the management fee expense.
Lake Estates' financial records dated September 30, 1979, report a management and consulting expense in the amount of $ 100,000.00. There is no account payable to, or account receivable from, TIC, Mr. Fry, or the MLJ Trust discernable from these records. The management and consulting expense at the end of 1979 was recorded as $ 110,867.36. *116 We conclude that the $ 8,000 is not repayment of a loan from TIC or a related entity because petitioners have failed to present a check proving the original loan transfer. Absent documentary evidence in the record of a loan from Lake Estates to TIC, we conclude that the $ 8,000.00 transfer was in part payment of the management or consulting expense.
Precious Metals transferred $ 51,769.41 to TIC, $ 4,300.00 to Group Legal Plan, and $ 10,000.00 to TIC Office Account. The profit and loss statement groups all Precious Metals' expenses other than interest, depreciation, rent, and repairs as miscellaneous operating expenses. The attached records indicate that the operating expenses were paid by an open account. In addition, TIC transferred $ 16,229.62 to Precious Metals to open a bank account which is shown as an account payable to TIC. We conclude that the $ 66,069.41 transferred from Precious Metals is an advance for payment of Precious Metals' operating expenses and is not taxable receipts to petitioners.
The Central Ohio Trust Trial Balance as of December 31, 1979, does not reflect an account receivable from TIC or Orlando Advertising at December 31, 1979. Thus, we conclude*117 that if the $ 10,900 transferred during 1979 to TIC and Orlando Advertising were loans, they were not outstanding at the end of 1979. Petitioners have not submitted checks or other documentary evidence proving a transfer from TIC and Orlando Advertising to Central Ohio Trust either as an original loan or a loan repayment.
The loss reported on the Central Ohio Trust financial statements ($ 61,592.19) is not as great as that reported on the fiduciary tax return ($ 174,087) which compels the conclusion that all of the expenses were not recorded on the financial statements. These financial statements are unreliable and do not conclusively prove anything. Accordingly, we conclude that the $ 10,900 transferred during 1979 constitutes taxable gross receipts.
The $ 138,528.95 transferred from Lake Middlebourne consists of $ 137,328.95 to TIC and $ 1,200.00 to TIC Office Account. During 1979, a restaurant was being constructed for Lake Middlebourne. In a letter to Lake Middlebourne investors dated August 9, 1980, TIC's vice president Curt Kittle stated that the construction costs of the restaurant were paid in cash. The transfers to TIC most likely represent repayment of those construction*118 costs. Accordingly, we conclude that these transfers are in the nature of loan repayments and are not taxable receipts.
The financial records submitted to corroborate the losses shown on the Casa Serena I and II Trust returns are incomplete. We are unable to determine from these financial records whether or not any of the transfers from Casa Serena during 1979 were recorded as asset purchases, loans, or expenses. In a letter to clients dated August 15, 1979, Mr. Fry stated that in July 1979, he used $ 110,500 of Casa Serena I funds to purchase 61 acres of land for a new mobile home park to be operated by Casa Serena II in a joint venture with Casa Serena I, Mr. Fry, and his father. However, we are unable to find a single deposit of $ 110,500 in respondent's schedules. Further, we do not find a cashier's check purchased in July.
That letter also states that Casa Serena I was a tax shelter in 1979 due to construction of the Casa Serena Mobile Home Park and invites clients to invest in Casa Serena Trust II. A "Fact Sheet" regarding Casa Serena II accompanied Mr. Fry's letter, and states that $ 100,000 is to be paid to Mr. Fry and his father as a design, planning, and organization*119 fee. While it is reasonable to infer that some of the transfers from the Casa Serena trusts repaid construction costs of the mobile home park, there is no evidence in this record for us to determine the amount.
The transfer of $ 59,300 in to the MLJ Trust particularly concerns this Court because the MLJ Trust is Mr. Fry's personal trust. Mr. Fry has not established that he has a legal obligation to repay the $ 59,300 transfer and has absolute dominion and control over these funds. Further, if in fact the $ 59,300 constituted a loan, we see nothing to prevent Mr. Fry from later reclassifying the account receivable as payment of the design management and consulting fee because Mr. Fry has complete accounting control over the Casa Serena Trusts. A cash basis taxpayer must include income the earlier of actual or constructive receipt.
Petitioners are deemed, under Rule 142(a), to concede the following bank deposits are taxable gross receipts (See table,
| BANK ACCOUNT | |
| Family Health & Improvement Society | $ 27,222.50 |
| Law Book Store | 10,405.20 |
| TIC (BONB) | 40,126.02 |
| TIC (VNB) | 939.30 |
| Total | $ 78,693.02 |
*120
Petitioners have not documented the source of funds to purchase or the purpose for the $ 5,000.00 cashier's check purchased April 20, 1979, or the $ 129,515.00 cashier's check purchased December 10, 1979. See
The check purchased on December 10th was co-endorsed by attorneys and from the record as a whole we infer that Mr. Fry purchased property with this check. However, we are unable to identify the property or the source of the funds. The check lists Mr. Fry as payee and, in absence of contrary evidence, we conclude that this check represents taxable receipts. Accordingly, petitioners had $ 134,515.00 of additional taxable receipts in 1979 from cashier's checks. Based upon the foregoing, we conclude that petitioners had total taxable gross receipts in 1979 as summarized on the following table.
| Deposit Source | Total | Taxable Receipts | Nontaxable receipts |
| Undocumented | $ 1,103,719.46 | $ 1,103,719.46 | - - |
| TIC (QCNB) | 46,814.44 | - - | $ 46,814.44 |
| Law Book Store | 4,250.00 | - - | 4,250.00 |
| TIC Office Account | 19,480.00 | - - | 19,480.00 |
| FHIS | 9,040.00 | - - | 9,040.00 |
| Tall Timbers | 5,785.41 | - - | 5,785.41 |
| Freedom Fuel Corp | 27,852.05 | 27,852.05 | - - |
| Leverage Leasing | 18,200.00 | - - | 18,200.00 |
| Hamilton Rd. | 2,588.62 | - - | 2,588.62 |
| La Oficina | 15,000.00 | 15,000.00 | - - |
| Lake Estates | 8,000.00 | 8,000.00 | - - |
| Precious Metals | 66,069.41 | - - | 66,069.41 |
| Central Ohio Trust #1 | 10,900.00 | 10,900.00 | - - |
| Lake Middlebourne | 138,528.95 | - - | 138,528.95 |
| Casa Serena I | 70,000.00 | ||
| Casa Serena II | 186,250.00 | 59,300.00 | 196,950.00 |
| Subtotal | $ 1,732,478.34 | $ 1,224,771.51 | $ 507,706.83 |
| Cashier's checks | 496,691.11 | 134,515.00 | 362,176.11 |
| Other deposits | 78,693.62 | 78,693.62 | - - |
| Total | $ 2,307,863.07 | $ 1,437,980.13 | $ 869,882.94 |
*121
After tracing petitioners checks to respondent's deposit schedules, we find the source of deposits to petitioners' accounts during 1980 to be as shown on the following page.
The undocumented deposits are income. The deposits listed above with TIC(QCNB), MLJ Trust, and MLJ/ML as their source are considered nontaxable transfers to prevent double inclusion of income.
Petitioners argue that the $ 260,000 transferred from petitioners' Valley National Bank account to the MLJ/Merrill Lynch account should be removed from taxable receipts to avoid double counting because the money was transferred from one entity to a related entity, and, alternatively, because the Valley
| Deposit | Group | Orlando | TIC Office |
| Source: | Legal Plan | Advertising | Account |
| Undocumented | $ 2,421.37 | $ 19,030.07 | - - |
| TIC (QCNB) | 27,133.04 | 12,755.00 | 12,165.14 |
| MLJ Trust | - - | - - | - - |
| MLJ/ML | 1,455.22 | 7,600.00 | - - |
| Phillip Fry (VNB) | - - | - - | - - |
| Capital Appreciation Trust | - - | - - | - - |
| Freedom Fuel Corp | - - | 21,100.00 | 2,000.00 |
| Leverage Leasing | 700.00 | 20,250.00 | 32,723.55 |
| Sports Paradise R V Park | - - | - - | - - |
| Hamilton Rd. Pshp. | - - | - - | - - |
| Central Ohio Trust #1 | - - | - - | - - |
| Jordan Estates | - - | - - | - - |
| Orchard Lakes | - - | - - | - - |
| Lake Middlebourne | - - | - - | - - |
| La Oficina | - - | - - | - - |
| Tall Timbers | - - | 10,000.00 | - - |
| Tradewinds Trust | - - | - - | - - |
| Fantasyland Trust | - - | - - | - - |
| Casa Serena | - - | - - | - - |
| Energy Lodging Trust | - - | - - | - - |
| Interest Earned | - - | - - | - - |
| Other Deposits | - - | - - | - - |
| Error Adjustments | - - | - - | - - |
| Total | $ 31,709.63 | $ 90,735.07 | $ 46,888.69 |
| 1980 | |||
| BANK ACCOUNTS | |||
| Deposit | MLJ | MLJ/ Merrill | TIC |
| Source: | Trust | Lynch | (QCNB) |
| Undocumented | $ 61,474.68 | $ - - | $ 675,864.56 |
| TIC (QCNB) | 4,360.00 | - - | - - |
| MLJ Trust | - - | 105,000.00 | - - |
| MLJ/ML | 74,800.00 | - - | 180,150.93 |
| Phillip Fry (VNB) | - - | 260,000.00 | - - |
| Capital Appreciation Trust | 82,500.00 | - - | - - |
| Freedom Fuel Corp | 44,700.00 | 140,000.00 | 33,975.00 |
| Leverage Leasing | 125,564.99 | 30,000.00 | 50,700.00 |
| Sports Paradise R V Park | - - | 25,000.00 | 16,000.00 |
| Hamilton Rd. Pshp. | 22,000.00 | - - | 9,750.00 |
| Central Ohio Trust #1 | 1,760.76 | - - | - - |
| Jordan Estates | 38,570.00 | - - | - - |
| Orchard Lakes | 55,832.00 | - - | - - |
| Lake Middlebourne | 951.95 | - - | 4,000.00 |
| La Oficina | 2,500.00 | - - | - - |
| Tall Timbers | 1,558.00 | - - | 2,181.20 |
| Tradewinds Trust | 660.00 | - - | 42,750.00 |
| Fantasyland Trust | 159,700.00 | - - | - - |
| Casa Serena | 15,000.00 | - - | - - |
| Energy Lodging Trust | 50,000.00 | - - | - - |
| Interest Earned | - - | 10,284.00 | - - |
| Other Deposits | 290,039.77 | 529,305.97 | - - |
| Error Adjustments | 30,000.00 | 20,724.00 | - - |
| Total | $ 1,061,972.15 | $ 1,120,313.97 | $ 1,015,371.69 |
| Deposit | TIC | Guernsey | |
| Source: | (BONB) | Lumber Co. | Total |
| Undocumented | $ 52,018.90 | $ 23,572.44 | $ 834,382.02 |
| TIC (QCNB) | 6,000.00 | 59,010.54 | 121,423.72 |
| MLJ Trust | - - | 10,000.00 | 115,000.00 |
| MLJ/ML | - - | 4,750.00 | 268,756.15 |
| Phillip Fry (VNB) | - - | - - | 260,000.00 |
| Capital Appreciation Trust | - - | - - | 82,500.00 |
| Freedom Fuel Corp | - - | - - | 241,775.00 |
| Leverage Leasing | - - | - - | 259,938.54 |
| Sports Paradise R V Park | - - | - - | 41,000.00 |
| Hamilton Rd. Pshp. | - - | 2,112.36 | 33,862.36 |
| Central Ohio Trust #1 | - - | 1,508.02 | 3,268.78 |
| Jordan Estates | - - | - - | 38,570.00 |
| Orchard Lakes | - - | - - | 55,832.00 |
| Lake Middlebourne | - - | - - | 4,951.95 |
| La Oficina | - - | - - | 2,500.00 |
| Tall Timbers | - - | - - | 13,739.20 |
| Tradewinds Trust | - - | - - | 43,410.00 |
| Fantasyland Trust | - - | - - | 159,700.00 |
| Casa Serena | - - | - - | 15,000.00 |
| Energy Lodging Trust | - - | - - | 50,000.00 |
| Interest Earned | - - | - - | 10,284.00 |
| Other Deposits | - - | - - | 819,345.74 |
| Error Adjustments | - - | - - | 50,724.00 |
| Total | $ 58,018.90 | $ 100,953.36 | $ 3,525,963.46 |
*123 National Bank account was not part of respondent's notice of deficiency. Petitioners submitted checks from the Valley National Bank to prove the source of funds transferred into the Merrill Lynch account. However, they did not prove the source of those same funds taxable or otherwise deposited in their Valley National account. Respondent did not allow the checks representing the $ 260,000 as a transfer on the MLJ/Merrill Lynch account, so we find the deposit amount was included as income in the notice of deficiency. We find that the $ 260,000 is properly included in petitioners taxable receipts because petitioners did not prove a nontaxable source for the initial deposit into the Valley National account. Our allowance of the MLJ Trust transfer to the MLJ/Merrill Lynch account as a nontaxable transfer prevents double inclusion of this income.
The $ 82,500 received from Capital Appreciation Trust was in payment of a management, consulting, and organization fee for organizing that syndication. We find that this was properly included in petitioners' income.
As noted in our discussion of 1979, the Freedom Fuel Corporation tax return for fiscal year ending September 30, 1989, expensed*124 $ 405,073 as a management and consultant fee. We find the deposits from Freedom Fuel Corporation are taxable receipts. Also as noted in our discussion of 1979, we consider the transfers from Leverage Leasing to be loans.
Sports Paradise Recreational Vehicle Park (SPRVP) differed from the majority of the other syndications in the respect that Mr. Fry did not reserve a management fee for organizing, operating, and managing the trust. Instead, the SPRVP syndication documents contain a lease for the syndication to lease the land upon which the recreational vehicle park was to be built from Mr. Fry at a rate of $ 2,500 per year. The fiduciary tax return expensed $ 25,000 in distributorship fees and $ 2,500 as rent. We find that the $ 25,000 deposited in the MLJ Trust account was in payment of a prepaid ground lease and income to Mr. Fry. Sec. 61;
There is no documentary explanation in the record of why $ 16,000 was transferred from SPRVP to TIC. The yearend financial statements show a $ 44,267.02 balance in the cash account while a notation states the actual check book balance was $ 971.02. In short, the financial statements are unreliable. The *125 recreational vehicle park was not constructed at the time this trust was syndicated and the trust had no other assets. In this instance we are able to trace the $ 16,000 transfer to syndication funds which, at the end of 1980, Mr. Fry has a duty to repay. Accordingly, we view the $ 16,000 transfer as nontaxable receipts.
The transfer from the Hamilton Road Partnership to the MLJ Trust was in the form of a $ 22,000 check made payable to the MLJ Trust. The Hamilton Road Partnership charged this payment against Mr. Fry's capital account in the partnership to the extent of $ 16,092.92, and the remaining $ 5,907.08 was charged against the balance of the account payable owed to TIC. Thus, the $ 5,907.08 is not income. Our discussion of Hamilton Road Partnership for 1979 states how Mr. Fry had a loss in excess of his capital account and how that capital account was restored. The original deposits were included in TIC's income, so when Hamilton Roads recorded the expenses TIC paid as a capital contribution, Mr. Fry may be viewed as having made an economic contribution to the partnership. Accordingly, when the Hamilton Road Partnership made the above distribution, it was a return of*126 capital to Mr. Fry and not income. The $ 9,750.00 transfer was a loan repayment and is a nontaxable receipt.
The Hamilton Road Partnership records reflect that the partnership expensed the amounts transferred to Guernsey Lumber Company as repairs and maintenance expense. According to Mr. Fry's accountant, the transfers from Hamilton Road Partnership and Central Ohio Trust to Guernsey Lumber Company would be sales receipts to Guernsey Lumber Company. We have no reason to doubt Mr. Snook's veracity and therefore conclude that the $ 2,112.36 transfer from Hamilton Road and the $ 1,508.02 transfer from Central Ohio Trust to Guernsey Lumber Company are taxable gross receipts.
The balance sheet of Central Ohio Trust at December 31, 1979, does not reflect an account payable to the MLJ Trust. Petitioners have not introduced any documentary evidence of a transfer from the MLJ Trust either as an original loan or a loan repayment. We therefore conclude that the $ 1,760.76 transfer was not a loan and represents taxable gross receipts.
The "Fact Sheets" and offer memoranda for the Jordan Estates and Orchard Lakes Estates syndications provide for a management, consulting, and organization*127 fee payable to Mr. Fry in the amounts of $ 50,000 and $ 80,000 respectively. The Orchard Lakes Balance Sheet at December 31, 1980, has an account payable for consulting fees in the amount of $ 27,710.00, which means the consulting fees were not paid all at once. The Jordan Estates financial records for 1980 reflect a $ 55,000 consulting fees expense but do not reflect an account payable for those consulting fees. We therefore conclude that the consulting fees were paid. Because the MLJ Trust was Mr. Fry's personal trust, and the transfers from these syndications were deposited to that trust, we find that the $ 38,570 and $ 55,832 were part payment of the management and consulting fee and therefore properly characterized as taxable receipts.
Of the $ 4,951.95 transferred from Lake Middlebourne, $ 951.95 was drawn on the Lake Middlebourne payroll account. The inescapable conclusion is that $ 951.95 represents taxable wages. The check for the $ 4,000 transfer was written on another account, presumably the business account, made payable to TIC, and charged against the account payable to TIC. Petitioner has proven to our satisfaction that the $ 4,000 transfer to TIC was more likely*128 than not a loan repayment.
The partial financial statements for La Oficina include a balance sheet for 1979 that does not reflect an account payable to the MLJ Trust at the end of 1979. Petitioners have not substantiated a transfer to La Oficina from MLJ during 1980, so we conclude that the $ 2,500 transfer was not a loan repayment. These La Oficina financial statements also include a 1980 profit and loss statement showing a loss ($ 15,192.91) different from that reported ($ 39,175) on the tax return filed by Mr. Fry. A balance sheet at the end of 1980 is not included. From petitioners' failure to include the balance sheet, we infer that it would not reflect a loan to MLJ Trust. Accordingly, we conclude that the $ 2,500 transferred is not a loan and constitutes taxable gross receipts.
The financial records of the Tall Timbers Trust show the $ 1,558.00 and the $ 2,181.20 transfers were charged to the "Distributed Earnings" account. Because these transfers were charged on the books to the distributed earnings account and not a receivable or payable account, we conclude that these transfers were not loans or loan repayments. Mr. Fry made no initial capital contribution to this*129 syndication so these transfers are not a return of capital. We therefore conclude that they are taxable receipts.
The $ 10,000 transfer from Tall Timbers to Orlando Advertising was drawn on a different bank checking account which is not reflected on the financial statements. Throughout 1980, the records of general ledger activity do not record this transfer as a loan or a loan repayment. Accordingly, we conclude the $ 10,000 transfer represents taxable receipts.
The records of general ledger account activity reflect the $ 660.00 transferred from Tradewinds Trust as distributed earnings, not as loans or loan repayments. Mr. Fry made no economic contribution to Tradewinds Trust. We conclude that the $ 660.00 transferred is properly included in taxable gross receipts. The $ 42,500 transferred repaid TIC for the cashier's check purchased December 28, 1979.
By the end of 1980, Mr. Fry was actively developing an amusement park called Paradise Lake Amusement Park. A TIC letter dated September 19, 1980, announced that the amusement park would be open to investors through a new trust named Fantasyland. The Fantasyland Trust Agreement states that the trust was formed to purchase *130 38 percent of Fantasyland, which covers 50 acres of Mr. Fry's 2,000-acre amusement park.
The financial statements indicate that $ 733,625 of the $ 1,520.000 capital solicited purchased 18.34 percent of the amusement park assets. The general ledger activity records an initial account payable to the MLJ Trust amounting to $ 733,600 (18.34 percent of 4 million dollars). The trust paid $ 640,196.75 leaving a balance of $ 93,403.25 remaining in the account payable to the MLJ Trust. We conclude that the deposits to the MLJ Trust were for the purchase of the amusement park assets and are properly included in taxable gross receipts.
We are not able to precisely determine the purpose of the transfers from Casa Serena to the MLJ Trust during 1980 on the record before us. Mr. Fry deposited the $ 15,000 in his trust and it is more likely than not that the check was issued in payment of the design, management, and consulting fee. Nevertheless, petitioners have argued the $ 15,000 transferred constitutes loans and they bear the ultimate burden of persuading this Court. They have failed to do so, and we conclude that the amount is properly included in taxable gross receipts.
The records *131 submitted to corroborate the Energy Lodging Trust tax return consist of a profit and loss statement, a schedule distributing the loss to the "trust beneficiaries", and page 3 of the general ledger activity schedule. We are unable to find any documentation of a loan from Energy Lodging to the MLJ Trust from these documents. Petitioners have failed to introduce any documentary evidence of an original loan transfer, so we conclude the $ 50,000 Energy Lodging transfer was not repayment of a loan to the MLJ Trust. Mr. Fry deposited the $ 50,000 transferred in his personal trust, and has not established a legal obligation to repay those funds. Petitioners have simply not persuaded us that the $ 50,000 transferred should be treated as nontaxable receipts.
The deposits listed as "Other Deposits" under the MLJ Trust column consists of a single deposit made on May 23, 1980. Petitioners produced the deposit slip for that deposit at the trial of this case. The deposit consists of three amounts, $ 142,651.00, $ 141,674.48, and $ 5,714.29. The exact same dollar amount was transferred from the MLJ Trust account to the MLJ/Merrill Lynch account on May 22, 1980 -- a day before the amount was*132 even deposited in the MLJ Trust account.
Mr. Fry testified that the source of these funds was from investors in the Innovative Investors Trust Syndication. The cost of a share of beneficial interest in this trust was $ 5,714.29. The first two amounts shown on the deposit slip are not equally divisible by 5,714.29. The partial financial reports state $ 291,429.00 was invested in this trust during 1980. A representative trust agreement introduced into evidence dated August 5, 1980, for the purchase of one unit of beneficial interest for $ 5,714.29 when added to the May 23, 1980, deposit clearly exceeds the $ 291,429.00 capitalization.
In short, we do not believe Mr. Fry's testimony that the total amount of the deposit consists of investors' funds. It is inconceivable to this Court how Mr. Fry could know exactly how many investors would wire a specific amount of money on a particular date to purchase an interest in a syndication the day before the actual transfers. The third item in the amount of $ 5,714.29 shown on the deposit slip is conceivably an investor's contribution and the portion of the deposit constituting income is to be reduced accordingly.
The MLJ/Merrill Lynch*133 account "Other Deposits" amount shown above contains two deposits. Mr. Fry assertedly received the deposit amounts of $ 126,361.66 and $ 402,944.31, as a straw man in an alleged tax-free section 1031 exchange from the sale of the Worthington Arms Mobile Home Park. Mr. Fry owned 10 percent and his father owned 90 percent of this mobile home park. Loan closing documents and a receipt from Merrill Lynch submitted by petitioners support the source of the funds for the two deposits. As a straw man in the alleged tax free exchange, 10 percent of the receipts attributable to Mr. Fry's ownership are taxable receipts. We need not decide whether the alleged tax free exchange is meritorious. *134 Petitioners are deemed, under Rule 142(a), to have conceded the following bank deposits are taxable gross receipts (See table, BANK ACCOUNTS Family Health & Improvement Society $ 17,678.06 TIC (VNB) 18,980.00 Increasing Innovative Income Magazine 22,547.53 Amusement Concepts 42,500.00 Total $ 101,705.59
Cashier's Checks
It appears from the endorsements on several of the cashier's checks that Mr. Fry purchased amusement rides costing $ 87,587.85. See
Of the other $ 58,587.85, Mrs. Fry's schedules reflect that $ 27,000 came from Fantasyland, $ 15,000 came from Amusement Concepts, and the remainder ($ 16,587.85) came from "related syndications" *135 and is not substantiated by documentary evidence. Petitioners have not substantiated the source of funds used to purchase other cashier's checks totalling $ 34,463.87, one of which is a $ 5,000 check made payable to Mrs. Fry.
As discussed above, Mr. Fry sold 18.34 percent of a portion of his amusement park to the Fantasyland syndication. We view the $ 27,000 transferred from Fantasyland as part of the purchase price paid to Mr. Fry and should be included in taxable gross receipts.
Petitioners deposited $ 42,500 in the Amusement Concepts bank account which is included in respondent's bank deposits analysis. The $ 15,000 from Amusement Concepts used to purchase the cashier check must be removed to prevent double inclusion of income. Based upon the foregoing, we conclude that petitioners received additional taxable receipts of $ 107,051.72 in 1980 which they used to purchase cashier's checks.
| Deposit Source: | Total Deposits | Taxable Receipts | Nontaxable receipts |
| Undocumented | $ 834,382.02 | $ 834,382.02 | - - |
| TIC (QCNB) | 121,423.72 | - - | $ 121,423.72 |
| MLJ Trust | 115,000.00 | - - | 115,000.00 |
| MLJ/ML | 268,756.15 | - - | 268,756.15 |
| Phillip Fry (VNB) | 260,000.00 | 260,000.00 | - - |
| Capital Appreciation | 82,500.00 | 82,500.00 | - - |
| Trust | |||
| Freedom Fuel Corp | 241,775.00 | 241,775.00 | - - |
| Leverage Leasing | 259,938.54 | - - | 259,938.54 |
| Sports Paradise RV | 41,000.00 | 25,000.00 | 16,000.00 |
| Park | |||
| Hamilton Rd. Pshp. | 33,862.36 | 2,112.36 | 31,750.00 |
| Central Ohio Trust #1 | 3,268.78 | 3,268.78 | - - |
| Jordan Estates | 38,570.00 | 38,570.00 | - - |
| Orchard Lakes Estates | 55,832.00 | 55,832.00 | - - |
| Lake Middlebourne | 4,951.95 | 951.95 | 4,000.00 |
| La Oficina | 2,500.00 | 2,500.00 | - - |
| Tall Timbers | 13,739.20 | 13,739.20 | - - |
| Tradewinds Trust | 43,410.00 | 660.00 | 42,750.00 |
| Fantasyland Trust | 159,700.00 | 159,700.00 | - - |
| Casa Serena | 15,000.00 | 15,000.00 | - - |
| Energy Lodging | 50,000.00 | 50,000.00 | - - |
| Interest Earned | 10,284.00 | 10,284.00 | - - |
| Other deposits | 819,345.74 | 337,256.08 | 482,089.66 |
| Deposit schedule | |||
| total $ 3,475,239.46 | $ 2,133,531.39 | $ 1,341,708.07 | |
| Other bank accounts | 101,705.59 | 101,705.59 | - - |
| Cashier's checks | 131,325.16 | 107,051.72 | 24,273.44 |
| Total receipts | $ 3,708,270.21 | $ 2,342,288.70 | $ 1,365,981.51 |
We find that petitioners had taxable gross receipts in 1980 in the amount of $ 2,342,288.70 as shown on the preceding table. In summary, we have determined the amount of gross receipts separately for all years at issue to be as follows:
| Year | Gross Receipts |
| 1977 | $ 226,615.99 |
| 1978 | $ 1,187,544.21 |
| 1979 | $ 1,437,980.13 |
| 1980 | $ 2,342,288.70 |
Shortly before the trial of this case, petitioners provided copies of the 1978 and 1979 workpapers to respondent's agents in support of their claim of deductible expenses. The income portions of the workpapers were blackened obscuring the income figures. Petitioners also produced, for the first time, detailed ledger cards, schedules, and cancelled checks in support of their claimed expenses. Mrs. Fry prepared and provided schedules for each expense*137 category in each year supported by cancelled checks and ledger cards. While petitioners provided documentation pertaining to the expenses of their own activities, they provided no underlying documentation for the syndicated entities which would support deductions for syndication expenses for the years 1978, 1979, or 1980.
Revenue Agent Anderson allowed the majority of the claimed deductions. Certain expenditures were capitalized and depreciated. Other expenditures were disallowed for lack of substantiation, duplication, or because they were non-deductible personal expenses. All of petitioners' personal family and living expenses were paid from the business checking accounts.
After concessions, the expenses, other than depreciation and syndicated trust losses, that are disputed by the parties are as follows.
| Expense Category: | 1977 | 1978 | 1979 | 1980 |
| Automobile | $ 402 | $ 4,864 | $ 5,264 | $ 242 |
| Indep. Contractors | - - | - - | $ 75,244 | - - |
| Reimbursed Expenses | - - | - - | - - | $ 1,500 |
| Travel | - - | - - | $ 10,390 | $ 7,776 |
| Legal Fees | - - | - - | $ 8,340 | - - |
| Bad Debts | - - | $ 154,706 | $ 179,804 | $ 185,546 |
Petitioners assert they are entitled to a 60-percent business usage*138 of their automobiles instead of the 50 percent allowed by respondent. They have failed to present any credible evidence to support the increased usage. Accordingly, we sustain respondent's allowance of automobile expenses for 1977, 1978, and 1979. Petitioners produced receipts for gasoline purchases dated in 1980 totaling $ 800.83. In keeping with respondent's allowance of 50 percent, petitioners are entitled to automobile expenses totaling $ 400.42 for 1980.
Respondent disallowed independent contractor expense in the amount of $ 56,651.00 for lack of substantiation and $ 18,593 for duplication of expense already allowed. Petitioners have failed to substantiate additional independent contractor expenses. Therefore, we sustain respondent's determination.
Respondent disallowed 1979 travel expenses as personal ($ 483), for duplication ($ 9,859), and for lack of substantiation ($ 48). He disallowed 1980 travel expenses of $ 7,776 as personal expenses. Petitioners have failed to present any credible evidence to disturb respondent's determination of such expenses.
Respondent disallowed $ 6,340 in legal expense for lack of substantiation and a $ 2,000 transfer to GLP. Petitioners*139 have failed to present evidence to substantiate these claimed expenses.
Petitioners claim they are accrual method taxpayers and entitled to a bad debt expenses they calculated by deducting 16 percent of TIC's gross sales for the year. The amounts claimed as bad debts were not actual payments under the TIC guarantee of results but were an accounting estimate based upon Mr. Fry's best estimate of how much TIC would ultimately repay clients. Rather than the direct charge-off method, petitioners claim to use the reserve method of accounting for bad debts.
Expenses must be determined on the same method of accounting as is used for determining taxable income.
The depreciation expense is in dispute due*140 to disagreement on the cost basis of equipment purchased during 1978 and 1979. Year Depreciation Depreciation Expense Basis 1977 1978 1979 1980 Pre-1977 $ 36,053 $ 6,448 $ 5,094 $ 3,647 $ 3,034 1977 $ 26,461 7,561 5,400 3,858 2,789 1978 $ 163,675 - - 37,147 36,149 25,821 1979 $ 96,890 - - - - 27,684 19,774 1980 $ 45,774 - - - - - - 13,078 Total $ 14,009 $ 47,641 $ 71,338 $ 64,496
In addition to depreciation and the above scheduled expenses, petitioners claim entitlement to syndicated trust*141 losses. The MLJ Trust held beneficial interest in almost all of the syndicated entities formed and promoted by Mr. Fry. Some of the trust returns introduced into evidence were incomplete in that the beneficial interests reported on the Schedules K-1 did not equal the total beneficial interest in the trust. In other cases, the amount distributed exceeded the net loss reported on the return.
Respondent did not allow the syndicated trust losses because the losses are not identifiable from petitioners' returns; petitioners have not substantiated the expenses and refused to allow respondent to examine the syndications' books and records; petitioners have not substantiated that they had sufficient tax basis to permit deduction of their distributive share of the losses; and the syndications losses are due, in part, to bogus Freedom Fuel Corporation license deductions.
Petitioners' share of syndicated trust losses shown on the syndication trust returns are shown on the following page.
| 1979 | Form 1041 loss | Fry Share |
| Precious Metals Holding Co. | $ 83,888 | $ 42,974 |
| Casa Serena Trust I & II | 121,267 | 15,461 |
| Central Ohio Trust #1 | 434,942 | 196,164 |
| Hamilton Rd. Ptnrshp., A Trust | 72,923 | 41,019 |
| La Oficina Trust | 119,996 | 19,196 |
| Lake Estates, A Trust | 450,981 | 180,385 |
| Lake Middlebourne Estates, A Trust | 98,053 | 10,187 |
| Tall Timbers Trust | 101,144 | 31,520 |
| Tradewinds Trust | 118,436 | 13,028 |
| Total claimed in 1979 | $ 1,601,630 | $ 549,934 |
| 1980 | ||
| Precious Metals Holding Co. | $ 45,136 | $ 37,536 |
| Casa Serena Trust I & II | 349,167 | 11,724 |
| Central Ohio Trust #1 | 174,087 | 77,643 |
| Hamilton Rd. Ptnrshp., A Trust | 34,012 | 19,132 |
| La Oficina Trust | 39,175 | 10,185 |
| Lake Estates, A Trust | 195,662 | 75,134 |
| Lake Middlebourne Estates, A Trust | 142,007 | 14,769 |
| Tall Timbers Trust | 108,897 | 33,927 |
| Tradewinds Trust | 85,220 | 9,347 |
| Capital Appreciation Trust | 276,867 | 46,514 |
| Columbus Game Arcade, A Trust | 24,940 | 16,616 |
| Energy Lodging Trust | 144,958 | 57,983 |
| Fantasyland Trust I | 338,823 | 0.00 |
| Innovative Investor Trust | 22,001 | 8,800 |
| Jordan Estates, A Trust | 112,812 | 22,562 |
| Orchard Lakes Estates | 142,992 | 22,879 |
| Sports Paradise R. V. Park | 27,500 | 0.00 |
| Total Claimed in 1980 | $ 2,264,256 | $ 464,751 |
*142 The above syndication trust losses include deductions for Freedom Fuel Corporation distributorship license agreements. Petitioners concede the deductions for the license agreements but claim entitlement to remaining trust losses, exclusive of FFC deductions, in the amounts of $ 324,164 and $ 366,037 for 1979 and 1980, respectively.
Petitioners submitted partial financial statements and fiduciary income tax returns (Forms 1041) to support their claimed syndication loss deductions. The financial statements consisted of a profit and loss statement and the portion of the balance sheet showing the liabilities and capital. Almost all of the balance sheets presented did not contain the assets section.
Respondent is not bound to accept a taxpayer's return at face value. Year Total Expenses 1977 $ 138,377 1978 $ 666,834 1979 $ 1,125,920 1980 $ 1,530,960
Respondent has the burden to prove fraud under
Fraud is not to be imputed or presumed.
The intent to conceal or mislead may be inferred from a pattern of conduct. See
Badges of fraud which may be taken into account include: (1) The making of false and inconsistent statements to revenue agents,
Petitioners' returns show a consistent pattern of underreporting their income. For the 1974, 1975, and 1976 taxable years, petitioners reported a net operating loss. After respondent examined the income tax returns for those years, petitioners were found to have deficiencies in tax. Petitioners admitted these deficiencies*147 in a previously docketed case. We have found petitioners have also underreported their income for 1977, 1978, 1979, and 1980.
Another consistent pattern that emerges when petitioners' returns are examined is that they filed "one-line returns" or returns which list minimal amounts of information. We view this as further evidence of petitioners' attempting to conceal the presence and source of their income.
Petitioners claimed bogus Freedom Fuel Corporation deductions on their returns indirectly by claiming syndicated trust losses. They further claimed syndicated trust losses for which they had no economic loss. It is well settled that a fraudulent understatement of income can be accomplished by an overstatement of deductions.
In determining the presence of fraud we may consider the native ability and the training and experience of the party involved. 73
The evidence shows that Mr. Fry was well educated and was mature, sophisticated, and shrewd in business matters. He also authored and sold several books on tax planning strategies. We think he knew what he *148 was doing and what he attempted to accomplish during the years in issue, which was the evasion of tax on substantial income.
A finding that a taxpayer acted fraudulently may also be supported by the fact that he was evasive, uncooperative, or dilatory during the course of the Commissioner's examination. Such conduct tends to indicate an effort to conceal the true facts concerning the taxpayer's financial affairs.
Accordingly, we find and hold*149 that Mr. Fry was fraudulent for all years in issue and is therefore liable for the additions to tax under
Fraud is not imputed from one spouse to another. In the case of a joint return, respondent must prove fraud as to each spouse charged for the addition to tax.
In light of our holding that a part of petitioners' underpayment of tax for all years in issue was due to fraud with the intent to evade tax, it necessarily follows that the assessment of the deficiencies for those years is not barred by the statute of limitations.
*150
Respondent determined petitioners were liable for self-employment tax in the amounts of $ 1,303.00, $ 1,434.00, $ 1,855.00, and $ 2,098.00 for 1977 through 1980, respectively. This self-employment tax was based on Mr. Fry's self-employment income.
On brief, petitioners admit to having income in 1977 and 1978, but argue any income in these years is offset by net operating losses incurred in 1979 and 1980. In essence, petitioners argue they had no self-employment income for the years in issue.
Petitioners received taxable income during all years in issue but did not make any estimated tax payments. Therefore, none of the above exceptions apply and petitioners are liable for the
Petitioners argue that 1979 and 1980 net operating losses offset prior years' income so that there is no underpayment for any year at issue. Alternatively they argue that, if this Court finds they underpaid their estimated tax liability, then such underpayment triggered no addition under
Petitioners did not have a net operating loss for their 1979 and 1980 taxable years. They stipulated to a decision admitting they owed $ 740.47 in income tax, not including any additions to tax, for their 1976 taxable year. Moreover, petitioners may not take advantage of the
Petitioners' also argue that even if this Court determines that they underpaid their tax and no other exception applies, the underpayment was due to reasonable cause, i.e., "petitioners' reasonable belief they were spending more in business deductions than they were receiving in gross income," and that imposition of the addition would be against equity and good conscience.
Furthermore, the "equity and good conscience language refers to underpayments caused "by reason of casualty, disaster, or other unusual circumstances."
To reflect our findings and conclusions herein and the concessions made by the parties,
APPENDIX A
AGREEMENT AS TO SCOPE OF SERVICES AND FEE
1. SCOPE OF SERVICES. Tax information Center will provide a written analysis of the financial tax situations of
The client shall receive a written report which will recommend such*154 alternatives and explain such alternatives. Once the client has chosen which alternatives he (she) wishes to implement, Tax Information Center will assist the client in obtaining a capable attorney to implement any steps which need the assistance of a capable attorney. Tax Information Center will reimburse the client for the fees charged by such attorney or, if the client so initials his approval here (
[] Group Legal Plan of Family Health and Improvement Society. Client(s) applies for membership at no cost to client(s) in the Family Health and Improvement Society. Membership entitles client(s) to participate in the Group Legal Services Plan of Family & Health Improvement Society.
Client's signature
Client's signature
Tax Information Center will do all federal, state and local income tax returns which reflect tax planning done by Tax Information Center for the year *155
To make federal and state income tax and death tax laws more understandable to client(s), Tax Information Center will provide to client(s) at no additional fee, and client agrees to read or participate in:
a) Philip Fry's books, Pay No Income Taxes Without Going To Jail, How to Disinherit The I.R.S. & Probate Court, Blood Taxes At Harvest Time, I.R.S. Code Made Understandable, and How to Find And Profit From Real Estate Bargains:
b) client reference manuals on how to use the various tax-planning entities selected by client(s);
c) Tax Information Center's monthly tax-serving magazine TAXING TIMES;
d) attendance at one of Tax Information Center's two-day weekend seminars (20 hours long on Saturday and Sunday). The seminars are held monthly at one of the following Tax Information Center offices: Seattle, Washington,; California; Phoenix, Arizona; Columbus, Ohio; or Cambridge, Ohio.
2. TERM OF CONTRACT. The duration of this contract is one year beginning the date of this Agreement on Page Two. Tax planning, tax returns, and tax audits for the next two subsequent years*156 are available to client, at the option of the client, at an annual percent of the first year fee provided for in paragraph four of this Agreement.
3. GUARANTEE OF RESULTS. Tax Information Center guarantees to save the client at least ten times the fee specified in paragraph four of this agreement plus any additional fees paid for tax planning, tax returns, and tax audits done by Tax Information Center in the two years following
Client(s)' Initials:
the initial year in federal, state, and local income taxes for the years
4. FEE. The client agrees to pay Tax Information Center an analysis and implementation fee of
If client fails to pay the fee in full, client(s) signing this Agreement herein agrees to pay all reasonable attorneys fees and court costs and collection agency fees incurred by Tax Information Center in collecting its fes, but such collection costs shall not exceed 50 percent of the amount due from client(s) signing this agreement. Client(s) understands and agrees that the fee charged by Tax Information Center is refundable only under the express provisions of paragraph three of this Agreement.
5. COVENANT NOT TO REVEAL TAX PLANNING IDEAS TO OTHERS. Tax Information Center has developed and perfected a number of tax-saving concepts and agreement wordings for client and client's selected attorney to use as examples for successful tax planning and estate planning. Client(s) signing this agreement specifically recognize that the ideas and agreement wordings communicated by Tax Information Center to client(s) attorney and client(s) are only for the use of the parties specified in paragraph one of this agreement. If *159 client(s) should ever show or share such idea or agreements with someone or entity other than client(s)' lawyer, accountant, tax collectors, or parties specified in paragraph one of this Agreement and their immediate families, client(s) agrees to pay Twenty-Five Thousand Dollars ($ 25,000.00) per person or entity communicated with as a fee to Tax Information Center and to pay all attorney fees and court costs incurred in collecting said fee from client(s).
6. REFERRAL FEE. IF client is satisfied with the analysis and implementation by Tax Information Center and knows taxpayers who could also benefit from such analysis and implementation by Tax Information Center, client should refrain from violating the covenant of paragraph five above (Covenant Not To Reveal Tax Planning Ideas To Others), but, rather inform in writing the National Sales Manager of Tax Information Center (Rt. 1, New Concord, Ohio 43762) of such referrals. Client referrals are entered in a register of referrals with a notation of the client who made the referrals. If such referral in fact becomes a client of Tax Information Center, Tax Information Center will pay a five percent (5%)-of-fee-collected referral fee*160 to the client making the referral.
7. COVERED SERVICES. Tax Information Center agrees to provide only those services specifically provided for in writing in this contract.
8. SOURCE OF STATE LAW. This Agreement is a full statement of the terms of Agreement between Tax Information Center and client(s). Should there be a question as to the meaning of this Agreement, such questions shall be resolved based on the contract laws of the State of Ohio. The client(s) agrees that any litigation of any kind between Tax Information Center and the client(s) shall take place in the Common Pleas Court of Guernsey County, Ohio. Client(s) agrees to by subject to the jurisdiction of the Common Pleas Court of Guernsey County, Ohio for any litigation between the parties.
This agreement was entered into on this
TAX INFORMATION CENTER by its President Philip S. Fry
CLIENT
CLIENT
APPENDIX B
| 1977 | ||||||||||
| Item | Check | Check | Payor/ | |||||||
| No. | Number | Date | Drawer | Payee | Amount | |||||
| 104-1 | 556 | 6/09/77 | Law Book Store | TIC | 104-2 | 623 | 6/21/77 | Law Book Store | TIC | 65.00 |
| 104-3 | 559 | 5/31/77 | Law Book Store | MLJ | 100.00 | |||||
| 104-4 | 1086 | 5/22/77 | TIC | MLJ | 20.00 | |||||
| 104-5 | 1048 | 2/17/77 | TIC (VNB) | LBS | 300.00 | |||||
| 104-6 | 1050 | 2/17/77 | TIC (VNB) | LBS | 300.00 | |||||
| 104-7 | 1176 | 9/02/77 | TIC (VNB) | LBS | 500.00 | |||||
| 104-8 | 1821 | 7/14/77 | Orlando Adv. | LBS | 110.00 | |||||
| 1978 | ||||||||||
| Item | Check | Check | Payor/ | |||||||
| No. | Number | Date | Drawer | Payee | Amount | |||||
| 105-1 | #1 | 10/10/78 | Phillip Fry | TIC | $ 9,500.00 | |||||
| 105-2 | #2 | 10/20/78 | Phillip Fry | TIC | 450.00 | |||||
| 105-3 | 229 | 10/17/78 | MLJ Trust | TIC | 9,000.00 | |||||
| 105-4 | 142 | 8/12/78 | F.H.I.S. | 105-5 | 1600 | 2/15/78 | TIC | MLJ | 300.00 | |
| 105-6 | 00604 | 7/12/78 | TIC | MLJ | 700.00 | |||||
| 105-7 | 00635 | 7/26/78 | TIC | MLJ | 300.00 | |||||
| 105-8 | 00768 | 8/22/78 | TIC | MLJ | 300.00 | |||||
| 105-9 | 00818 | 8/31/78 | TIC | MLJ | 200.00 | |||||
| 105-10 | 00867 | 9/12/78 | TIC | MLJ | 300.00 | |||||
| 105-11 | 127 | 3/14/78 | F.H.I.S. | Orl.Adv. | 450.00 | |||||
| 105-12 | 00272 | 4/11/78 | TIC | FHIS | ||||||
| 105-13 | DM | 9/28/78 | TIC | FHIS | ||||||
| 105-14 | 00591 | 7/07/78 | TIC | CASH | 8,222.00 | |||||
| 105-15 | 01838 | 12/14/78 | TIC | QCNB | 10,000.00 | |||||
| 105-16 | 01041 | 10/27/78 | TIC | QCNB | 1,760.00 | |||||
*162
| 1979 | ||||||||||
| Item | Check | Check | Payor/ | |||||||
| No. | Number | Date | Drawer | Payee | Amount | |||||
| 106-1 | 126 | 4/08/79 | Hamilton Rd. Pshp | TIC | $ 2,588.62 | |||||
| 106-2 | 101 | 9/07/79 | Casa Serena No. II | TIC | 16,900.00 | |||||
| 106-3 | 108 | 11/09/79 | Casa Serena No.II | TIC | 25,000.00 | |||||
| 106-4 | 114 | 9/14/79 | Central Ohio No. 1 | TIC | 106-5 | 355 | 4/20/79 | Lake Middlebourne | TIC | 1,297.50 |
| 106-6 | DM | 6/08/79 | Lake Middlebourne | TIC | 40,000.00 | |||||
| 106-7 | DM | 3/26/79 | Precious Metals | TIC | ||||||
| TOA | 20,000.00 | |||||||||
| 106-8 | #3 | 2/13/79 | Casa Serena | P. Fry | 10,000.00 | |||||
| 106-9 | #5 | 2/20/79 | Casa Serena | P. Fry | 25,000.00 | |||||
| 106-10 | -- | 12/10/79 | Tall Timbers | TIC | 5,785.41 | |||||
| 106-11 | 356 | 4/26/79 | Lake Middlebourne | TIC | 5,000.00 | |||||
| 106-12 | 103 | 10/10/79 | Casa Serena No. II | TIC | 10,000.00 | |||||
| 106-13 | 122 | 1/09/79 | TIC Office Account | TIC | 106-14 | 158 | 1/16/79 | TIC Office Account | TIC | |
| 106-15 | #7 | 2/28/79 | Casa Serena | TOA | 25,000.00 | |||||
| 106-16 | DM | 3/26/79 | Precious Metals | TIC | 10,000.00 | |||||
| 106-17 | CM | 3/26/79 | Precious Metals | TOA | 10,000.00 | |||||
| 106-18 | 192 | 6/27/79 | Lake Middlebourne | TOA | 1,000.00 | |||||
| 106-19 | 01130 | 3/08/79 | TIC | TIC | ||||||
| 106-20 | DM | 6/18/79 | TIC | TOA | ||||||
| 106-21 | DM | 11/01/79 | Casa Serena No. II | MLJ | 59,000.00 | |||||
| 106-22 | #1001 | 9/26/79 | TIC | MLJ | ||||||
| 106-23 | 157 | 4/15/79 | FHIS | S. Fry | 500.00 | |||||
| 106-24 | 01345 | 4/20/79 | TIC | S. Fry | ||||||
| 106-25 | 01382 | 5/03/79 | TIC | S Fry | ||||||
| 106-26 | 123 | 1/09/79 | TIC Office Account | MLJ | ||||||
| 106-27 | DM | 5/06/79 | TIC | MLJ | ||||||
| 106-28 | CM | 11/01/79 | Casa Serena & | |||||||
| Leverage Leasing | MLJ | 77,500.00 | ||||||||
| 106-29 | DM | 11/01/79 | Leverage Leasing | MLJ | 18,200.00 | |||||
| 106-30 | #6 | 2/28/79 | Casa Serena | Orl.Adv. | 5,000.00 | |||||
| 106-31 | 02905 | 9/27/79 | TIC | Orl.Adv. | 1,000.00 | |||||
| 106-32 | 02980 | 10/08/79 | TIC | Orl.Adv. | 1,000.00 | |||||
| 106-33 | 149 | 8/09/79 | Precious Metals | GLP | 4,300.00 | |||||
| 106-34 | 03278 | 11/29/79 | TIC | GLP | ||||||
| 106-35 | CM | 9/04/79 | TIC | GLP | ||||||
| 106-36 | #4 | 2/20/79 | Casa Serena | QCNB | 45,000.00 | |||||
| 106-37 | 126 | 3/25/79 | Precious Metals | EP Realty | 5,000.00 | |||||
| 106-38 | 131 | 5/18/79 | Lake Middlebourne | QCNB | 30,000.00 | |||||
| 106-39 | DM | 12/28/79 | Tradewinds Trust | QCNB | 88,750.00 | |||||
| 106-40 | 03117 | 11/06/79 | TIC | QCNB | 2,995.20 | |||||
| 106-41 | 03376 | 12/12/79 | TIC | QCNB | 6339.04 | |||||
| 1980 | ||||||||||
| Item | Check | Check | Payor/ | |||||||
| No. | Number | Date | Drawer | Payee | Amount | |||||
| 107-1 | 1001 | 1/18/80 | Tradewinds Trust | TIC | $ 24,000.00 | |||||
| 107-2 | 1002 | 1/25/80 | Tradewinds Trust | TIC | 18,750.00 | |||||
| 107-3 | 589 | 7/11/80 | Lake Middlebourne | TIC | 2,000.00 | |||||
| 107-4 | 376 | 10/17/80 | Hamilton Rd. Pshp | TIC | 9,750.00 | |||||
| 107-5 | CM | 11/24/80 | Fantasyland Trust | TIC | 107-6 | 623 | 7/29/80 | Lake Middlebourne | TIC | 2,000.00 |
| 107-7 | 53 | 2/25/80 | MLJ Trust | TIC | 20,000.00 | |||||
| 107-8 | 543 | 2/29/80 | MLJ Trust | TIC | 107-9 | 768 | 10/03/80 | MLJ Trust | TIC | |
| 107-10 | 884 | 11/20/80 | MLJ Trust | TIC | ||||||
| 107-11 | 122 | 5/15/80 | Fry, (VNB) Az. | TIC | ||||||
| 107-12 | 1009 | 6/03/80 | Sports Paradise | TIC | 6,000.00 | |||||
| 107-13 | DM | 2/22/80 | MLJ Trust | TIC | 10,000.00 | |||||
| 107-14 | DM | 5/12/80 | Sports Paradise | TIC | ||||||
| 107-15 | 1048 | 6/04/80 | Freedom Fuel Corp. | TIC | 9,000.00 | |||||
| 107-16 | 1015 | 2/07/80 | Freedom Fuel Corp. | TIC | 14,000.00 | |||||
| 107-17 | 1097 | 7/30/80 | Freedom Fuel Corp. | TIC | 2,600.00 | |||||
| 107-18 | 1118 | 9/16/80 | Freedom Fuel Corp. | TIC | 4,425.00 | |||||
| 107-19 | 132 | 5/02/80 | Leverage Leasing | TIC | 9,000.00 | |||||
| 107-20 | 150 | 5/30/80 | Leverage Leasing | TIC | 5,000.00 | |||||
| 107-21 | 170 | 7/21/80 | Leverage Leasing | TIC | 10,000.00 | |||||
| 107-22 | 171 | 7/25/80 | Leverage Leasing | TIC | 14,000.00 | |||||
| 107-23 | 202 | 10/15/80 | Leverage Leasing | TIC | 6,500.00 | |||||
| 107-24 | 125 | 3/07/80 | Leverage Leasing | TIC | 6,200.00 | |||||
| 107-25 | 05062 | 3/28/80 | TIC | TOA | ||||||
| 107-26 | 05084 | 4/10/80 | TIC | TOA | ||||||
| 107-27 | 05092 | 4/04/80 | TIC | TOA | ||||||
| 107-28 | 05285 | 5/14/80 | TIC | TOA | ||||||
| 107-29 | 05362 | 5/23/80 | TIC | TOA | ||||||
| 107-30 | 05602 | 6/20/80 | TIC | TOA | ||||||
| 107-31 | 04455 | 10/05/80 | TIC | TOA | ||||||
| 107-32 | 04329 | 9/09/80 | TIC | TIC | ||||||
| 107-33 | 04355 | 9/12/80 | TIC | TOA | ||||||
| 107-34 | 03670 | 10/03/80 | TIC | TOA | ||||||
| 107-35 | 03739 | 11/10/80 | TIC | TOA | ||||||
| 107-36 | 05989 | 7/22/80 | TIC | TOA | ||||||
| 107-37 | 03611 | 9/24/80 | TIC | TIC | 1,600.00 | |||||
| 107-38 | 01600 | 9/16/80 | TIC | TIC | 1,200.00 | |||||
| 107-39 | DM | 7/11/80 | Leverage Leasing | TOA | ||||||
| 107-40 | DM | 7/15/80 | Leverage Leasing | TOA | ||||||
| 107-41 | DM | 7/11/80 | Leverage Leasing | TOA | ||||||
| 107-42 | DM | 8/15/80 | Leverage Leasing | TOA | ||||||
| 107-43 | 131 | 5/01/80 | Leverage Leasing | TOA | 3,450.00 | |||||
| 107-44 | 156 | 6/12/80 | Leverage Leasing | TOA | 4,000.00 | |||||
| 107-45 | 177 | 8/04/80 | Leverage Leasing | TOA | 4,509.90 | |||||
| 107-46 | 179 | 8/07/80 | Leverage Leasing | TOA | 6,000.00 | |||||
| 107-47 | 188 | 8/25/80 | Leverage Leasing | TOA | 1,000.00 | |||||
| 107-48 | 192 | 8/28/80 | Leverage Leasing | TOA | 1,000.00 | |||||
| 107-49 | 219 | 11/06/80 | Leverage Leasing | TOA | 6,263.65 | |||||
| 107-50 | DM | 7/11/80 | Leverage Leasing | TOA | 2,000.00 | |||||
| 107-51 | DM | 7/31/80 | Leverage Leasing | TOA | 500.00 | |||||
| 107-52 | 1080 | 7/08/80 | Freedom Fuel Corp. | TOA | 2,000.00 | |||||
| 107-53 | 428 | 4/18/80 | Tall Timbers | MLJ | 2,181.20 | |||||
| 107-54 | 101-A | 9/24/80 | Fantasyland | MLJ | 20,000.00 | |||||
| 107-55 | 107 | 12/26/80 | Fantasyland | MLJ | 30,000.00 | |||||
| 107-56 | 366 | 10/05/80 | Hamilton Rd. Pshp | MLJ | 22,000.00 | |||||
| 107-57 | 973 | 8/24/80 | Lake Middlebourne | MLJ | 156.95 | |||||
| 107-58 | 934 | 8/27/80 | Lake Middlebourne | MLJ | 795.00 | |||||
| 107-59 | 1681 | 10/27/80 | Central Ohio Trust | MLJ | 1,760.76 | |||||
| 107-60 | 366 | 11/03/80 | Tradewinds Trust | MLJ | 330.00 | |||||
| 107-61 | 297 | 8/28/80 | Tradewinds Trust | MLJ | 330.00 | |||||
| 107-62 | 565 | 8/28/80 | Tall Timbers Trust | MLJ | 1,558.00 | |||||
| 107-63 | 102 | 11/03/80 | Orchard Lakes | MLJ | 20,000.00 | |||||
| 107-64 | 132 | 10/10/80 | La Oficina | MLJ | 2,500.00 | |||||
| 107-65 | 118 | 7/25/80 | Casa Serena II | MLJ | 4,000.00 | |||||
| 107-66 | #5 | 11/20/80 | Jordan Estates | MLJ | 20,000.00 | |||||
| 107-67 | #6 | 11/21/80 | Jordan Estates | MLJ | 18,570.00 | |||||
| 107-68 | 119 | 7/29/80 | Casa Serena II | MLJ | 11,000.00 | |||||
| 107-69 | 101 | 10/03/80 | Fantasyland | MLJ | 10,000.00 | |||||
| 107-70 | 105 | 11/03/80 | Fantasyland | MLJ | 29,700.00 | |||||
| 107-71 | 106 | 12/08/80 | Fantasyland | MLJ | 27,000.00 | |||||
| 107-72 | 104 | 10/24/80 | Fantasyland | MLJ | 70,000.00 | |||||
| 107-73 | 103 | 11/14/80 | Orchard Lakes | MLJ | 35,832.00 | |||||
| 107-74 | 101 | 12/08/80 | Amusement Concepts | lMLJ | 15,000.00 | |||||
| 107-75 | 163 | 6/25/80 | TIC | S. Fry | 500.00 | |||||
| 107-76 | 04377 | 9/17/80 | TIC | MLJ | ||||||
| 107-77 | 06075 | 8/08/80 | TIC | MLJ | ||||||
| 107-78 | 05697 | 7/02/80 | TIC | MLJ | ||||||
| 107-79 | 1126 | 10/07/80 | Freedom Fuel Corp. | MLJ | 15,000.00 | |||||
| 107-80 | 169 | 7/10/80 | Leverage Leasing | MLJ | 40,000.00 | |||||
| 107-81 | 172 | 7/28/80 | Leverage Leasing | MLJ | 20,000.00 | |||||
| 107-82 | 200 | 10/16/80 | Leverage Leasing | MLJ | 30,000.00 | |||||
| 107-83 | 211 | 10/29/80 | Leverage Leasing | MLJ | 15,000.00 | |||||
| 107-84 | 243 | 12/04/80 | Leverage Leasing | MLJ | 20,564.99 | |||||
| 107-85 | 1002 | 7/03/80 | Sports Paradise | MLJ/ML | 25,000.00 | |||||
| 107-86 | DM | 2/08/80 | MLJ Trust | MLJ/ML | ||||||
| 107-87 | 621 | 5/22/80 | MLJ | MLJ/ML | 290,039.77 | |||||
| 107-88 | 761 | 9/24/80 | MLJ | MLJ/ML | ||||||
| 107-89 | 770 | 10/03/80 | MLJ | MLJ/ML | ||||||
| 107-90 | DM | 3/07/80 | Freedom Fuel Corp | MLJ/ML | 40,000.00 | |||||
| 107-91 | DM | 1/15/80 | Freedom Fuel Corp | MLJ/ML | 100,000.00 | |||||
| 107-92 | 164 | 7/03/80 | Leverage Leasing | MLJ | 30,000.00 | |||||
| 107-93 | DM | 1/29/80 | Leverage Leasing | MLJ/ML | x 63,000.00 | |||||
| 107-94 | 1001 | 1/22/80 | Tall Timbers | Orl.Adv. | 10,000.00 | |||||
| 107-95 | 03612 | 9/24/80 | TIC | Orl.Adv. | ||||||
| 107-96 | 03841 | 11/29/80 | TIC | Orl.Adv. | ||||||
| 107-97 | 03957 | 12/12/80 | TIC | Orl.Adv. | ||||||
| 107-98 | 04381 | 9/17/80 | TIC | Orl.Adv. | ||||||
| 107-99 | 04484 | 10/09/80 | TIC | Orl.Adv. | ||||||
| 107-100 | 04557 | 10/24/80 | TIC | Orl.Adv. | ||||||
| 107-101 | 04809 | 2/23/80 | TIC | Orl.Adv. | 200.00 | |||||
| 107-102 | 1042 | 4/23/80 | Freedom Fuel Corp. | Orl.Adv. | 3,100.00 | |||||
| 107-103 | DM | 2/04/80 | Freedom Fuel Corp. | Orl.Adv. | 10,000.00 | |||||
| 107-104 | 1009 | 1/11/80 | Freedom Fuel Corp. | Orl.Adv. | 5,000.00 | |||||
| 107-105 | 195 | 9/02/80 | Leverage Leasing | Orl.Adv. | 2,500.00 | |||||
| 107-106 | 207 | 10/24/80 | Leverage Leasing | Orl.Adv. | 1,500.00 | |||||
| 107-107 | 210 | 10/27/80 | Leverage Leasing | Orl.Adv. | 3,000.00 | |||||
| 107-108 | 215 | 11/03/80 | Leverage Leasing | Orl.Adv. | 4,500.00 | |||||
| 107-109 | 220 | 11/12/80 | Leverage Leasing | Orl.Adv. | 4,500.00 | |||||
| 107-110 | 225 | 11/14/80 | Leverage Leasing | Orl.Adv. | 3,000.00 | |||||
| 107-111 | 242 | 12/02/80 | Leverage Leasing | Orl.Adv. | 1,250.00 | |||||
| 107-112 | 03530 | 1/24/80 | TIC | GLP | ||||||
| 107-113 | 03532 | 1/11/80 | TIC | GLP | ||||||
| 107-114 | 03669 | 10/03/80 | TIC | GLP | ||||||
| 107-115 | 03701 | 10/30/80 | TIC | GLP | ||||||
| 107-116 | 03765 | 11/14/80 | TIC | GLP | ||||||
| 107-117 | 03785 | 11/22/80 | TIC | GLP | ||||||
| 107-118 | 03959 | 12/12/80 | TIC | GLP | ||||||
| 107-119 | 04029 | 12/24/80 | TIC | GLP | ||||||
| 107-120 | 04109 | 7/24/80 | TIC | GLP | ||||||
| 107-121 | 04197 | 8/22/80 | TIC | GLP | ||||||
| 107-122 | 04328 | 9/09/80 | TIC | GLP | ||||||
| 107-123 | 0452- | 10/16/80 | TIC | GLP | 2,155.22 | |||||
| 107-124 | 04786 | 2/22/80 | TIC | GLP | ||||||
| 107-125 | 05066 | 4/03/80 | TIC | GLP | ||||||
| 107-126 | 05103 | 4/07/80 | TIC | GLP | ||||||
| 107-127 | 05154 | 4/18/80 | TIC | GLP | ||||||
| 107-128 | 05394 | 5/29/80 | TIC | GLP | ||||||
| 107-129 | 05504 | 6/12/80 | TIC | GLP | ||||||
| 107-130 | 05671 | 6/26/80 | TIC | GLP | ||||||
| 107-131 | 05779 | 7/11/80 | TIC | GLP | ||||||
| 107-132 | 06072 | 8/07/80 | TIC | GLP | ||||||
| 107-133 | 06088 | 8/22/80 | TIC | GLP | ||||||
| 107-134 | 192 | 7/14/80 | TIC | GLP | 700.00 | |||||
| 107-135 | CM | 5/16/80 | TIC | GLP | 700.00 | |||||
| 107-136 | 130 | 5/01/80 | Leverage Leasing | GLP | 700.00 | |||||
| 107-137 | 1688 | 10/31/80 | Central Ohio Trust | GLC | 530.31 | |||||
| 107-138 | 375 | 10/17/80 | Hamilton Rd. Pshp | GLC | 755.69 | |||||
| 107-139 | 389 | 10/31/80 | Hamilton Rd. Pshp | GLC | 1,047.27 | |||||
| 107-140 | 391 | 11/14/80 | Hamilton Rd. Pshp | GLC | 309.40 | |||||
| 107-141 | 1635 | 10/17/80 | Central Ohio Trust | GLC | 977.71 | |||||
| 107-142 | 889 | 11/21/80 | TIC | GLC | ||||||
| 107-143 | 03668 | 10/03/80 | TIC | GLC | ||||||
| 107-144 | 03672 | 10/30/80 | TIC | GLC | ||||||
| 107-145 | 03710 | 10/31/80 | TIC | GLC | ||||||
| 107-146 | 03808 | 11/17/80 | TIC | GLC | ||||||
| 107-147 | 03865 | 11/28/80 | TIC | GLC | 2,000.00 | |||||
| 107-148 | 03912 | 12/08/80 | TIC | GLC | ||||||
| 107-149 | 03960 | 12/12/80 | TIC | GLC | ||||||
| 107-150 | 03999 | 12/17/80 | TIC | GLC | ||||||
| 107-151 | 04001 | 12/17/80 | TIC | GLC | 10,162.78 | |||||
| 107-152 | 04010 | 12/22/80 | TIC | GLC | 5,000.00 | |||||
| 107-153 | 04061 | 12/26/80 | TIC | GLC | ||||||
| 107-154 | 04199 | 8/22/80 | TIC | GLC | ||||||
| 107-155 | 04390 | 9/18/80 | TIC | GLC | ||||||
| 107-156 | 04501 | 10/15/80 | TIC | GLC | ||||||
| 107-157 | 04545 | 10/17/80 | TIC | GLC | ||||||
| 107-158 | 06078 | 8/08/80 | TIC | GLC | ||||||
| 107-159 | 06096 | 9/14/80 | TIC | GLC | ||||||
| 107-160 | 03740 | 11/12/80 | TIC | GLC | 1,000.00 | |||||
| 107-161 | 864 | 11/14/80 | TIC | GLC | ||||||
| 107-162 | 1003 | 3/07/80 | Tradewinds Trust | Lev.Lsg. | ||||||
| 107-163 | 210 | 3/05/80 | Precious Metals | Lev.Lsg. | ||||||
| 107-164 | 267 | 10/15/80 | Precious Metals | Lev.Lsg. | ||||||
| 107-165 | 111 | 10/30/90 | Columbus Game Arcade | QCNB | 3,694.00 | |||||
| 107-166 | 161 | 6/30/80 | Leverage Leasing | QCNB | 7,273.44 | |||||
In addition to the transfers denoted above by an asterisk, respondent, on brief, allowed the following transfers.
| Check | Payor | ||
| Date | Drawer | Payee | Amount |
| 10/11/77 | LBS | Orl.Adv. | $ 600.00 |
| 1/05/78 | TIC | FHIS | 650.00 |
| 12/11/78 | MLJ | P. Fry | 48.50 |
| 3/27/79 | FHIS | TOA | 3,000.00 |
| 12/30/80 | TIC | GLP | 1,600.00 |
We have taken these transfers into account where we were able to identify the deposit. The check written on December 30, 1980, does not appear on the 1980 GLP deposit schedule. We conclude the check was deposited in 1981.
APPENDIX C
The details of respondent's bank deposits analysis work paper schedules are reproduced below. All checks contained in petitioners' Exhibits 104 through 107, as numbered in appendix B, are listed by a notation under the "APPENDIX B ITEM NO." column of the relevant schedule in this appendix. The description for items annotated under the "Transfer From" *165 and "Other Annotation" columns appear on respondent's work paper schedules. Our summary and discussion follows the deposit schedules.
| CASHIER'S CHECKS | ||||
| 1977 | ||||
| APPENDIX B | ||||
| ITEM | ||||
| DATE | PAYEE | AMOUNT | NOTATION | NUMBER |
| 12/28/77 | Phillip Fry | 1,000.00 | Net Cashier's Checks | |
| MLJ TRUST | ||||
| Quaker City National Bank | ||||
| a/c 084-507-3 | ||||
| 1977 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 02/08/77 | 6,979.25 | |||
| 02/28/77 | 59.95 | |||
| 03/14/77 | 150.00 | |||
| 04/29/77 | 38.50 | |||
| 05/27/77 | 20.00 | TIC | Ck 1086 | 104-3 |
| 06/03/77 | 100.00 | LBS | Ck 559 | 104-4 |
| $ 7,347.70 | Total Deposits | |||
| 0.00 | Transfers | |||
| $ 7,347.70 | Deposits per notice of deficiency | |||
| TAX INFORMATION CENTER | ||||
| Quaker National Bank | ||||
| a/c 099-273-5 | ||||
| 1977 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/10/77 | $ 2,100.00 | |||
| 01/13/77 | 3,876.90 | |||
| 01/21/77 | 176.20 | |||
| 01/24/77 | 213.50 | |||
| 01/26/77 | 246.50 | |||
| 01/27/77 | 150.55 | |||
| 02/14/77 | 149.67 | |||
| 03/03/77 | 452.00 | |||
| 04/04/77 | 207.00 | |||
| 04/04/77 | 346.25 | |||
| 05/13/77 | 800.00 | |||
| 05/17/77 | 91.34 | |||
| 05/19/77 | 167.20 | |||
| 05/20/77 | 481.13 | |||
| 05/23/77 | 104.00 | |||
| 05/23/77 | 306.34 | |||
| 05/23/77 | 356.00 | |||
| 05/25/77 | 24.25 | |||
| 05/26/77 | 1,952.50 | |||
| 85 | 232.85 | |||
| 06/09/77 | 520.00 | 104-1 | ||
| 06/22/77 | 240,84 | 104-2 | ||
| 07/05/77 | 99.50 | |||
| 09/06/77 | 26.75 | |||
| 09/08/77 | 431.75 | |||
| 09/12/77 | 345.50 | |||
| 09/12/77 | 1,000.40 | |||
| 09/13/77 | 325.20 | |||
| 09/13/77 | 7,248.24 | |||
| 09/14/77 | 776.20 | |||
| 09/15/77 | 63.00 | |||
| 09/16/77 | 101.55 | |||
| 09/16/77 | 214.37 | |||
| 09/16/77 | 1,150.00 | |||
| 09/20/77 | 222.08 | |||
| 09/20/77 | 441.24 | |||
| 09/23/77 | 168.40 | |||
| 09/23/77 | 269.20 | |||
| 09/23/77 | 651.75 | |||
| 09/26/77 | 620.68 | |||
| 09/27/77 | 52.25 | |||
| 09/29/77 | 40.00 | |||
| 09/30/77 | 54.25 | |||
| 09/30/77 | 4,817.25 | |||
| 10/04/77 | 339.20 | |||
| 10/05/77 | 4,130.00 | |||
| 10/07/77 | 39.50 | |||
| 10/07/77 | 364.16 | |||
| 10/11/77 | 220.00 | |||
| 10/11/77 | 366.25 | |||
| 10/11/77 | 1,213.50 | |||
| 10/11/77 | 1,941.75 | |||
| 10/14/77 | 1,239.75 | |||
| 10/17/77 | 2,500.00 | |||
| 10/17/77 | 2,591.65 | |||
| 10/26/77 | 489.02 | |||
| 10/27/77 | 2,372.20 | |||
| 10/28/77 | 893.20 | |||
| 10/31/77 | 1,500.00 | |||
| 11/02/77 | 1,140.45 | |||
| 11/04/77 | 1,520.22 | |||
| 11/07/77 | 200.25 | |||
| 11/07/77 | 3,204.35 | |||
| 11/07/77 | 10,406.75 | |||
| 11/10/77 | 187.75 | |||
| 11/10/77 | 214.50 | |||
| 11/14/77 | 165.89 | |||
| 11/14/77 | 925.00 | |||
| 11/15/77 | 74.75 | |||
| 11/16/77 | 508.40 | |||
| 11/18/77 | 842.75 | |||
| 11/18/77 | 2,103.32 | |||
| 11/21/77 | 403.35 | |||
| 11/21/77 | 3,596.41 | |||
| 11/23/77 | 720.65 | |||
| 11/25/77 | 114.75 | |||
| 11/28/77 | 139.10 | |||
| 11/28/77 | 531.50 | |||
| 11/29/77 | 46.20 | |||
| 12/02/77 | 115.75 | |||
| 12/05/77 | 44.45 | |||
| 12/06/77 | 1,753.95 | |||
| 12/07/77 | 73.25 | |||
| 12/09/77 | 154.62 | |||
| 12/12/77 | 17.75 | |||
| 12/12/77 | 147.33 | |||
| 12/13/77 | 6,280.84 | |||
| 12/14/77 | 1,013.00 | |||
| 12/14/77 | 1,500.30 | |||
| 12/19/77 | 102.58 | |||
| 12/19/77 | 3,663.80 | |||
| 12/19/77 | 5,174.00 | |||
| 12/22/77 | 180.00 | |||
| 12/22/77 | 2,967.45 | |||
| 12/23/77 | 120.15 | |||
| 12/27/77 | 1,327.50 | |||
| $ 104,197.57 | Total deposits | |||
| 0.00 | Transfers | |||
| $ 104,197.57 | Deposits per notice of deficiency | |||
| "LET THE PEOPLE KNOW" | |||||
| LAW BOOK STORE | |||||
| Central National Bank | |||||
| a/c 04410261 | |||||
| 1977 Deposits | |||||
| 01/13/77 | 247.00 | 03/18/77 | 07/04/77 | 313.75 | |
| 01/15/77 | 706.50 | 03/19/77 | 385.00 | 06/04/77 | 585.00 |
| 01/15/77 | 136.49 | 03/23/77 | 06/05/77 | 680.00 | |
| 01/17/77 | 115.00 | 03/24/77 | 171.00 | 06/06/77 | 237.75 |
| 01/19/77 | 534.39 | 03/25/77 | 85.70 | 06/07/77 | 590.00 |
| 01/23/77 | 282.00 | 03/27/77 | 348.45 | 06/01/77 | 565.00 |
| 01/24/77 | 322.50 | 03/27/77 | 497.58 | 07/07/77 | |
| 01/28/77 | 1,480.00 | 03/28/77 | 37.25 | 06/08/77 | 195.50 |
| 01/28/77 | 1,036.50 | 03/28/77 | 380.16 | 06/05/77 | 1,171.0 |
| 01/31/77 | 110.45 | 03/29/77 | 06/04/77 | 1,680.00 | |
| 02/01/77 | 509.41 | 03/30/77 | 06/09/77 | 1,875.00 | |
| 02/02/77 | 490.55 | 03/31/77 | 05/02/77 | 41.50 | |
| 02/03/77 | 206.75 | 04/01/77 | 292.00 | 06/03/77 | |
| 02/04/77 | 153.50 | 04/04/77 | 06/10/77 | 974.00 | |
| 02/04/77 | 475.00 | 04/06/77 | 871.75 | 06/10/77 | 1,247.75 |
| 02/05/77 | 184.00 | 04/06/77 | 1,140.00 | 06/10/77 | |
| 02/07/77 | 345.00 | 04/09/77 | 1,235.99 | 06/11/77 | 119.25 |
| 02/11/77 | 607.77 | 04/09/77 | 115.00 | 06/11/77 | 47.25 |
| 02/12/77 | 353.45 | 04/12/77 | 06/11/77 | 179.75 | |
| 02/12/77 | 175.00 | 04/13/77 | 15.00 | 06/15/77 | 273.50 |
| 02/13/77 | 56.95 | 04/13/77 | 158.00 | 06/15/77 | 105.00 |
| 02/14/77 | 283.30 | 04/14/77 | 236.50 | 06/17/77 | |
| 02/15/77 | 353.50 | 04/15/77 | 06/17/77 | 455.00 | |
| 02/17/77 | 184.00 | 04/15/77 | 06/17/77 | 60.50 | |
| 02/17/77 | 513.95 | 04/18/77 | 06/20/77 | ||
| 02/17/77 | 366.00 | 04/18/77 | 119.50 | 06/27/77 | 110.00 |
| 02/18/77 | 227.65 | 04/20/77 | 06/27/77 | ||
| 02/20/77 | 223.50 | 04/20/77 | 202.50 | 06/24/77 | 234.25 |
| 02/20/77 | 43.09 | 04/23/77 | 54.00 | 06/24/77 | 46.50 |
| 02/22/77 | 342.50 | 04/22/77 | 122.40 | 06/24/77 | 75.45 |
| 02/23/77 | 04/27/77 | 1,419.95 | 06/27/77 | ||
| 02/23/77 | 77.00 | 04/25/77 | 147.50 | 06/29/77 | 431.00 |
| 02/25/77 | 261.57 | 04/27/77 | 2,641.70 | 06/29/77 | 133.50 |
| 02/26/77 | 102.57 | 03/08/77 | 100.00 | 06/29/77 | 100.00 |
| 02/28/77 | 357.77 | 04/27/77 | 383.78 | 07/02/77 | 200.50 |
| 02/28/77 | 56.45 | 04/28/77 | 77.50 | 07/13/77 | 91.01 |
| 02/28/77 | 15.00 | 04/29/77 | 82.00 | 07/02/77 | 314.25 |
| 03/02/77 | 89.84 | 05/02/77 | 07/05/77 | 65.75 | |
| 03/03/77 | 941.50 | 05/05/77 | 1,253.00 | 07/06/77 | 42.75 |
| 03/04/77 | 921.14 | 05/05/77 | 60.00 | 07/08/77 | 512.25 |
| 03/04/77 | 41.50 | 05/05/77 | 135.01 | 07/08/77 | 377.25 |
| 03/06/77 | 1,174.35 | 05/06/77 | 07/08/77 | 223.64 | |
| 03/07/77 | 470.00 | 05/07/77 | 250.15 | 07/10/77 | 317.20 |
| 03/08/77 | 272.00 | 05/08/77 | 07/11/77 | 246.80 | |
| 03/09/77 | 140.00 | 05/11/77 | 11.75 | 07/11/77 | 67.50 |
| 03/09/77 | 141.59 | 05/13/77 | 432.04 | 07/13/77 | 136.00 |
| 03/11/77 | 05/16/77 | 07/13/77 | 75.30 | ||
| 03/12/77 | 232.05 | 05/17/77 | 56.25 | 07/13/77 | 28.25 |
| 03/14/77 | 167.00 | 05/17/77 | 426.70 | 07/13/77 | 89.00 |
| 03/15/77 | 49.51 | 05/20/77 | 47.00 | 07/14/77 | n1 956.00 |
| 03/15/77 | 05/26/77 | 1,983.00 | 07/15/77 | 11.50 | |
| 03/16/80 | 05/31/77 | 405.00 | 07/15/77 | 52.50 | |
| 03/17/77 | 150.00 | 05/31/77 | 600.00 | 07/15/77 | 88.55 |
| 03/22/77 | 15.50 | 05/31/77 | 419.15 | 07/18/77 | |
| 03/21/77 | 56.00 | 06/02/77 | 139.50 | 07/21/77 | |
| 03/18/77 | 123.50 | 06/03/77 | 07/20/77 | ||
| 07/23/77 | 113.43 | 08/18/77 | 62.00 | 10/04/77 | 67.50 |
| 07/24/77 | 1,805.00 | 08/19/77 | 296.77 | 10/07/77 | 177.50 |
| 07/24/77 | 50.00 | 08/19/77 | 10/08/77 | 70.75 | |
| 07/22/77 | 56.50 | 08/16/77 | 2,190.00 | 10/;08/77 | 583.50 |
| 07/19/77 | 20.00 | 08/23/77 | 17.72 | 10/10/77 | 597.00 |
| 07/25/77 | 08/22/77 | 230.90 | 10/11/77 | 980.00 | |
| 07/28/77 | 08/24/77 | 283.95 | 10/14/77 | 475.75 | |
| 07/27/77 | 08/26/77 | 41.40 | 10/15/77 | 188.50 | |
| 07/27/77 | 36.75 | 08/29/77 | 659.50 | 10/20/77 | 113.50 |
| 07/27/77 | 10.50 | 08/29/77 | 226.50 | 10/21/77 | 652.95 |
| 07/29/77 | 08/29/77 | 10/25/77 | 162.00 | ||
| 08/01/77 | 709.75 | 08/29/77 | 77.00 | 10/24/77 | 315.00 |
| 08/01/77 | 45.25 | 08/31/77 | 16.75 | 10/28/77 | 965.00 |
| 07/29/77 | 16.50 | 09/01/77 | 10/28/77 | 1,242.50 | |
| 08/03/77 | 122.00 | 09/01/77 | 26.50 | 11/02/77 | 118.75 |
| 08/08/77 | 16.75 | 09/02/77 | 11/04/77 | 859.75 | |
| 08/08/77 | 09/02/77 | 17.00 | 11/05/77 | 76.00 | |
| 08/09/77 | 09/03/77 | 150.00 | 11/09/77 | 138.75 | |
| 08/10/77 | 25.00 | 09/06/77 | 11/17/77 | 300.00 | |
| 08/10/77 | 09/06/77 | 61.75 | 11/18/77 | 497.75 | |
| 08/11/77 | 240.00 | 09/06/77 | 215.50 | 11/28/77 | 282.25 |
| 08/11/77 | 35.50 | 09/08/77 | 11/29/77 | 41.00 | |
| 08/11/77 | 25.50 | 09/14/77 | 134.50 | 11/30/77 | 162.25 |
| 08/12/77 | 64.00 | 09/14/77 | 218.25 | 11/30/77 | 70.25 |
| 08/05/77 | 09/16/77 | 32.25 | 12/03/77 | 223.75 | |
| 08/12/77 | 09/20/77 | 214.00 | 12/11/77 | 198.50 | |
| 09/08/77 | 103.75 | 09/22/77 | 548.75 | 12/12/77 | 210.00 |
| 09/08/77 | 85.00 | 09/23/77 | 1,046.75 | 12/15/77 | 528.50 |
| 08/15/77 | 160.00 | 09/26/77 | 49.50 | 12/20/77 | 99.00 |
| 08/15/77 | 2,610.75 | 09/28/77 | 160.50 | 12/28/77 | 570.50 |
| 09/30/77 | 94.00 | 12/30/77 | 221.75 | ||
| Deposits | $ 96,909.15 | ||||
| * Cash not deposited | 7,195.00 | ||||
| Total Receipts | $ 104,104.15 | ||||
| Addition errors (net) | (12.00) | ||||
| Deposits per notice | |||||
| of deficiency | $ 104,092.15 | ||||
*167 The net addition errors amount shown above reconciles the sum of deposits listed above to the amount of deposits shown on respondent's schedule.
| ORLANDO ADVERTISING | ||||
| Quaker City National Bank | ||||
| a/c 089-810-6 | ||||
| 1977 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/04/77 | 600.00 | |||
| 01/04/77 | 600.00 | |||
| 01/24/77 | 600.00 | LBS | Ck. 136 | |
| 02/04/77 | 250.00 | LBS | Ck. 170 | |
| 02/16/77 | 125.75 | LBS | Ck. 201; $ 106.00 | |
| 02/17/77 | 120.00 | |||
| 02/24/77 | 200.00 | |||
| 03/03/77 | 65.00 | |||
| 03/14/77 | 5.39 | |||
| 03/16/77 | 340.00 | LBS | Ck. 245 | |
| 03/24/77 | 150.00 | LBS | Ck. 267 | |
| 04/14/77 | 90.00 | |||
| 05/03/77 | 60.58 | |||
| 05/03/77 | 159.80 | |||
| 05/09/77 | 175.00 | LBS | Ck. 514 | |
| 05/23/77 | 100.00 | |||
| 05/23/77 | 125.00 | |||
| 05/31/77 | 500.00 | LBS | Ck. 524 | |
| 06/03/77 | 800.00 | LBS | Ck. 532 | |
| 06/09/77 | 300.00 | LBS | Ck. 556 | |
| 06/16/77 | 500.00 | LBS | Ck. 599 | |
| 06/27/77 | 500.00 | LBS | Ck. 635 | |
| 08/22/77 | 1,000.00 | LBS | Ck. 799 | |
| 09/07/77 | 60.00 | LBS | Ck. 809 | |
| 09/13/77 | 100.00 | |||
| 09/19/77 | 500.00 | |||
| 09/26/77 | 1,200.00 | LBS | Ck. 845 | |
| 10/05/77 | 600.00 | LBS | Ck. 853 | |
| 10/11/77 | 300.00 | |||
| 10/11/77 | 600.00 | |||
| 10/17/77 | 1,200.00 | |||
| 10/31/77 | 200.00 | LBS | Ck. 867 | |
| 11/14/77 | 130.00 | |||
| 11/21/77 | 250.00 | |||
| 11/30/77 | 300.00 | |||
| 12/05/77 | 412.00 | |||
| $ 13,218.52 | Total Deposits | |||
| 0.00 | Transfers | |||
| $ 13,218.52 | Deposits per notice of deficiency | |||
| ORLANDO ADVERTISING AGENCY | ||||
| Quaker City National Bank | ||||
| a/c 089-810-6 | ||||
| 1978 Deposits | ||||
| APPENDIX | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/17/78 | 400.00 | LBS | Ck 896 | |
| 02/03/78 | 1,094.00 | |||
| 02/27/78 | 125.00 | |||
| 03/06/78 | 500.00 | |||
| 03/13/78 | 265.00 | LBS | Ck 116; $ 250 | |
| 03/16/78 | 450.00 | 105-11 | ||
| 03/22/78 | 1,000.00 | LBS | Ck 103 | |
| 03/28/78 | 793.00 | |||
| 03/31/78 | 810.00 | LBS | Ck 109 | |
| 04/04/78 | [497.80] | Cr payment stopped on Ck #1843 | ||
| 05/03/78 | 500.00 | |||
| 05/08/78 | 1,000.00 | |||
| 05/11/78 | 1,000.00 | LBS | Ck 156 | |
| 05/15/78 | 1,000.00 | TIC | ||
| 05/22/78 | 237.39 | |||
| 06/02/78 | 6.80 | |||
| 06/15/78 | 500.00 | LBS | Ck 169 | |
| 07/03/78 | 22.10 | |||
| 07/07/78 | 200.00 | |||
| 08/15/78 | 1,200.00 | |||
| 08/31/78 | 1,000.00 | TIC | Ck 814 | |
| 08/31/78 | 4,000.000 | TIC | Ck 819 | |
| 09/15/78 | 1,500.00 | TIC | Ck 870 | |
| 09/15/78 | [127.50] | RE | ||
| 06/15/78 | [127.50] | RE | ||
| 09/15/78 | 400.89 | |||
| 10/02/78 | 800.00 | TIC | Ck 948 | |
| 10/10/78 | 600.00 | TIC | Debit Memo | |
| 10/16/78 | 53.99 | |||
| 10/23/78 | 1,000.00 | TIC | Debit Memo | |
| 10/27/78 | [81.60] | Cr payment stopped | ||
| 10/27/78 | 2,096.81 | TIC | Ck 1042; $ 2,000 | |
| 11/15/78 | 20.00 | |||
| 11/17/78 | 30.05 | |||
| 11/20/78 | 43.26 | |||
| 12/11/78 | 525.50 | TIC | Ck 1824; $ 500 | |
| $ 23,173.79 | Total Deposits | |||
| 16,456.81 | Transfers | |||
| $ 6,716.98 | Deposits per notice of deficiency | |||
*169 Items in brackets [] are not included in the total.
| FAMILY HEALTH & IMPROVEMENT SOCIETY | ||||
| Quaker City National Bank | ||||
| a/c 065-513-5 | ||||
| 1978 Deposits | ||||
| APPENDIX | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/05/78 | 650.00 | * | ||
| 01/09/78 | 500.00 | |||
| 01/10/78 | 500.00 | |||
| 01/23/78 | 1,000.00 | |||
| 01/31/78 | 25.00 | |||
| 02/03/78 | 25.00 | |||
| 02/08/78 | 1,000.00 | |||
| 03/02/78 | 25.00 | |||
| 03/03/78 | 150.00 | |||
| 03/08/78 | 575.00 | |||
| 03/08/78 | 800.00 | |||
| 03/23/78 | 325.00 | |||
| 03/23/78 | 175.00 | |||
| 04/06/78 | 25.00 | |||
| 04/11/78 | 2,900.00 | 105/12 | ||
| 04/24/78 | 325.00 | |||
| 05/01/78 | 25.00 | |||
| 05/08/78 | 150.00 | |||
| 06/02/78 | 75.00 | |||
| 06/09/78 | 75.00 | |||
| 06/15/78 | 1,600.00 | |||
| 07/21/78 | 300.00 | |||
| 08/04/78 | 175.00 | |||
| 08/04/78 | 1,375.00 | |||
| 08/07/78 | 450.00 | |||
| 08/14/78 | 200.00 | |||
| 08/25/78 | 475.00 | |||
| 08/31/78 | 200.00 | |||
| 09/05/78 | 200.00 | |||
| 09/11/78 | 525.00 | |||
| 09/19/78 | 175.00 | |||
| 09/25/78 | 650.00 | |||
| 09/30/78 | 350.00 | 105-13 | ||
| 10/10/78 | 200.00 | |||
| 10/16/78 | 2,200.00 | |||
| 10/27/78 | 125.00 | |||
| 10/30/78 | 225.00 | |||
| 11/13/78 | 325.00 | |||
| 11/13/78 | 676.00 | |||
| 12/20/78 | 150.00 | |||
| $ 19,901.00 | Total Deposits | |||
| 0.00 | Transfers | |||
| $ 19,901.00 | Deposits per notice of deficiency | |||
*170
*171| TAX INFORMATION CENTER | |||||
| Quaker City National Bank | |||||
| a/c 099-273-5 | |||||
| 1978 Deposits | |||||
| 01/03/78 | $ 308.50 | 03/17/78 | 821.50 | 05/19/78 | 449.25 |
| 01/04/78 | 112.22 | 03/20/78 | 1,067.25 | 05/19/78 | 2,175.50 |
| 01/04/78 | 527.50 | 03/21/78 | 460.00 | 05/22/78 | 16,218.15 |
| 01/04/78 | 1,000.00 | 03/21/78 | 3,105.95 | 05/23/78 | 9,806.75 |
| 01/06/78 | 103.25 | 03/22/78 | 83.75 | 05/23/78 | 10,000.00 |
| 01/09/78 | 25.50 | 03/22/78 | 4,025.00 | 05/24/78 | 50.75 |
| 01/09/78 | 2,135.25 | 03/23/78 | 250.00 | 05/26/78 | 583.15 |
| 01/10/78 | 3,306.86 | 03/24/78 | 70.75 | 05/30/78 | 154.50 |
| 01/11/78 | 1,544.00 | 03/24/78 | 1,087.70 | 06/01/78 | 12,921.75 |
| 01/11/78 | 8,000.00 | 03/28/78 | 1,830.95 | 06/02/78 | 1,607.33 |
| 01/12/78 | 117.00 | 03/28/78 | 2,936.93 | 06/02/78 | 4,200.00 |
| 01/13/78 | 521.00 | 03/30/78 | 1,129.35 | 06/05/78 | 3,702.00 |
| 01/16/78 | 117.02 | 03/31/78 | 10,019.62 | 06/05/78 | 11,351.75 |
| 01/16/78 | 236.75 | 04/03/78 | 533.44 | 06/06/78 | 1,093.20 |
| 01/17/78 | 80.00 | 04/03/78 | 2,556.43 | 06/06/78 | 3,500.00 |
| 01/19/78 | 715.00 | 04/05/78 | 29.00 | 06/09/78 | 13,702.05 |
| 01/19/78 | 3,166.00 | 04/05/78 | 30.50 | 06/12/78 | 1,712.26 |
| 01/23/78 | 2,000.00 | 04/05/78 | 250.00 | 06/13/78 | 500.00 |
| 01/23/78 | 4,000.00 | 04/05/78 | 386.15 | 06/14/78 | 1,206.89 |
| 01/27/78 | 58.50 | 04/05/78 | 7,197.81 | 06/15/78 | 1,900.00 |
| 01/27/78 | 195.00 | 04/06/78 | 771.70 | 06/15/78 | 2,612.90 |
| 01/30/78 | 379.00 | 04/10/78 | 410.00 | 06/19/78 | 58.00 |
| 01/30/78 | 2,536.60 | 04/11/78 | 103.25 | 06/19/78 | 4,722.25 |
| 01/31/78 | 182.50 | 04/11/78 | 1,268.00 | 06/19/78 | 9,562.50 |
| 02/01/78 | 9,914.66 | 04/11/78 | 5,175.32 | 06/22/78 | 1,309.00 |
| 02/03/78 | 2,354.10 | 04/13/78 | 152.12 | 06/23/78 | 10,021.95 |
| 02/06/78 | 123.70 | 04/13/78 | 300.00 | 06/26/78 | 3,801.35 |
| 02/06/78 | 165.45 | 04/14/78 | 100.00 | 06/29/78 | 4,922.00 |
| 02/08/78 | 4,336.63 | 04/14/78 | 656.10 | 06/30/78 | 214.16 |
| 02/09/78 | 221.50 | 04/17/78 | 374.93 | 07/03/78 | 1,041.70 |
| 02/10/78 | 2,582.05 | 04/17/78 | 801.25 | 07/06/78 | 2,521.86 |
| 02/13/78 | 136.00 | 04/17/78 | 906.09 | 07/06/78 | 4,731.50 |
| 02/14/78 | 3,136.25 | 04/17/78 | 1,000.00 | 07/10/78 | 2,500.00 |
| 02/15/78 | 334.75 | 04/18/78 | 2,676.00 | 07/10/78 | 4,874.50 |
| 02/16/78 | 48.50 | 04/19/78 | 1,803.90 | 07/10/78 | 10,501.25 |
| 02/17/78 | 336.45 | 04/21/78 | 4,518.89 | 07/11/78 | 1,574.75 |
| 02/21/78 | 117.50 | 04/24/78 | 81.75 | 07/12/78 | 410.50 |
| 02/21/78 | 2,328.00 | 04/24/78 | 399.09 | 07/14/78 | 339.00 |
| 02/23/78 | 583.00 | 04/26/78 | 115.20 | 07/17/78 | 500.68 |
| 02/23/78 | 583.00 | 04/26/78 | 115.20 | 07/17/78 | 500.68 |
| 02/23/78 | 2,358.60 | 04/27/78 | 568.75 | 07/18/78 | 318.25 |
| 02/24/78 | 2,761.00 | 04/28/78 | 1,030.50 | 07/21/78 | 2,713.30 |
| 02/27/78 | 3,125.75 | 04/28/78 | 2,591.22 | 07/25/78 | 1,048.50 |
| 02/28/78 | 9,251.75 | 05/01/78 | 2,112.75 | 07/26/78 | 889.35 |
| 03/02/78 | 3,162.54 | 05/03/78 | 4,176.75 | 07/26/78 | 5,022.00 |
| 03/03/78 | 137.25 | 05/04/78 | 288.31 | 07/28/78 | 2,746.75 |
| 03/06/78 | 1,255.95 | 05/05/78 | 4,335.35 | 07/31/78 | 981.75 |
| 03/06/78 | 1,902.15 | 05/08/78 | 938.14 | 08/01/78 | 6,714.50 |
| 03/07/78 | 294.75 | 05/08/78 | 1,633.36 | 08/04/78 | 621.25 |
| 03/08/78 | 2,548.50 | 05/10/78 | 544.10 | 08/04/78 | 3,800.00 |
| 03/09/78 | 2,166.75 | 05/11/78 | 101.05 | 08/07/78 | 3,031.50 |
| 03/10/78 | 1,930.96 | 05/11/78 | 368.75 | 08/09/78 | 2,615.25 |
| 03/13/78 | 542.61 | 05/11/78 | 2,500.00 | 08/11/78 | 7,000.00 |
| 03/13/78 | 140.96 | 05/15/78 | 449.70 | 08/14/78 | 1,592.50 |
| 03/13/78 | 05/15/78 | 637.96 | 08/14/78 | 3,530.75 | |
| 03/14/78 | 1,125.25 | 05/16/78 | 2,979.80 | 08/15/78 | 6,071.45 |
| 03/15/78 | 141.25 | 05/17/80 | 278.25 | 08/17/78 | 6,221.25 |
| 03/16/78 | 1,520.75 | 05/19/78 | 319.50 | 08/18/78 | 2,708.65 |
| 08/21/78 | 2,411.50 | 10/12/78 | 3,249.72 | 11/17/78 | 16,746.20 |
| 08/21/78 | 16,400.40 | 10/16/78 | 518.25 | 11/20/78 | 2,164.55 |
| 08/22/78 | 263.10 | 10/16/78 | 1,243.75 | 11/20/78 | 5,067.75 |
| 08/23/78 | 1,969.00 | 10/16/78 | 12,395.00 | 11/22/78 | 5,554.38 |
| 08/30/78 | 8,965.24 | 10/18/78 | n2 9,825.20 | 11/24/78 | 7,297.75 |
| 08/31/78 | 2,300.00 | 10/19/78 | 2,214.25 | 11,24.78 | 56,171.00 |
| 08/31/78 | 7,750.00 | 10/20/78 | n3 1,574.43 | 11/27/78 | 5,902.95 |
| 09/05/78 | 200.00 | 10/23/78 | 954.00 | 11/28/78 | 9,896.52 |
| 09/08/78 | 5,110.50 | 10/23/78 | 1,950.00 | 11/30/78 | 5,769.00 |
| 09/08/78 | 425.40 | 10/24/78 | 2,070.75 | 11/30/78 | 12,086.30 |
| 09/08/78 | 3,000.00 | 10/24/78 | 4,520.20 | 12/04/78 | 4,510.00 |
| 09/11/78 | 236.28 | 10/26/78 | 1,214.38 | 12/04/78 | 10,020.95 |
| 09/12/78 | 6,448.65 | 10/27/78 | 183.50 | 12/05/78 | 8,606.25 |
| 09/13/78 | 5,510.50 | 10/27/78 | 1,031.00 | 12/07/78 | 4,224.54 |
| 09/15/78 | 2,872.28 | 1,000.00 | 12/11/78 | 1,047.54 | |
| 09/18/78 | 462.95 | 10/30/78 | 3,000.00 | 12/11/78 | 4,597.00 |
| 09/18/78 | 515.50 | 10/31/78 | 22,490.50 | 12/13/78 | 4,301.00 |
| 09/19/78 | 230.00 | 11/02/78 | 2,746.50 | 12/13/78 | 6,012.00 |
| 09/19/78 | 2,833.86 | 11/03/78 | 189.38 | 12/15/78 | 10,623.05 |
| 09/22/78 | 380.67 | 11/06/78 | 2,530.45 | 12/18/78 | 3,000.00 |
| 09/22/78 | 3,579.79 | 11/06/78 | 2,689.45 | 12/18/78 | 4,412.00 |
| 09/25/78 | 10,097.75 | 11/07/78 | 18,000.00 | 12/18/78 | 5,072.50 |
| 09/26/78 | 6,388.75 | 11/09/78 | 204.00 | 12/20/78 | 140.00 |
| 09/29/78 | 1,681.15 | 11/09/78 | 29,675.00 | 12/20/78 | 17,321.18 |
| 09/30/78 | 74.17 | 11/10/78 | 7,671.04 | 12/21/78 | 3,500.75 |
| 10/02/78 | 10.437.25 | 11/10/78 | 11,540.75 | 12/26/78 | 110.00 |
| 10/03/78 | 7,201.40 | 11/13/78 | 10,679.70 | 12/26/78 | 4,399.50 |
| 10/05/78 | 11,386.00 | 11/13/78 | 18,275.00 | 12/27/78 | 2,500.00 |
| 10/10/78 | 728.75 | 11/14/78 | 3,960.00 | 12/27/78 | 14,059.00 |
| 10/10/78 | 1,700.25 | 11/15/78 | 3,287.77 | 12/29/78 | 14,527.60 |
| 10/10/78 | n1 9,000.00 | 11/17/78 | 3,547.50 | 12/30/78 | 1,500.00 |
| 12/30/78 | 25,000.00 | ||||
| Total Deposits | $ 998,258.62 | ||||
| Transfers | (4,000.00) | ||||
| Addition Errors | (2,307.72) | ||||
| Deposits per schedule | $ 991,950.50 | ||||
| Unexplained variance | 0.40 | ||||
| Deposits per notice of | |||||
| deficiency | $ 991,950.90 | ||||
[Footnotes 1, 2, 3 Not on Original].
| ORLANDO ADVERTISING AGENCY | ||||
| Quaker City National Bank | ||||
| a/c 089-810-6 | ||||
| 1979 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 02/02/79 | [RE 300.00] | |||
| 02/05/79 | 500.00 | TIC | Ck 1138 | |
| 02/09/79 | 250.00 | LBS | Ck 644 | |
| 02/20/79 | 900.00 | |||
| 03/02/79 | 5,000.00 | 106-30 | ||
| 03/20/79 | 5,000.00 | |||
| 03/27/79 | 4,000.00 | TIC Office Acct | ||
| 04/06/79 | [5,000.00] | Cr. Check Returned | ||
| 04/09/79 | 288.80 | |||
| 05/04/79 | 69.15 | |||
| 05/07/79 | 123.35 | |||
| 05/18/79 | 1,000.00 | TIC | Ck 1461 | |
| 05/21/79 | 114.48 | |||
| 05/23/79 | 9.78 | |||
| 06/04/79 | 1,000.00 | TIC | Ck 2298 | |
| 06/06/79 | 213.10 | |||
| 06/18/79 | 61.56 | |||
| 07/03/79 | [RE 16.57] | |||
| 07/03/79 | [RE 22.52] | |||
| 07/05/79 | [RE 15.68] | |||
| 07/05/79 | [RE 21.24] | |||
| 07/06/79 | 300.00 | TIC | ||
| 07/09/79 | 6.00 | |||
| 07/20/79 | 4.52 | |||
| 07/30/79 | 58.54 | |||
| 08/06/79 | 609.19 | |||
| 08/27/79 | 6.67 | |||
| 08/29/79 | 200.00 | TIC | Ck 2686 | |
| 09/07/79 | 1,000.00 | TIC | Ck 2744 | |
| 09/13/79 | 200.00 | |||
| 09/14/79 | 400.00 | TIC | CK 2796 | |
| 09/28/79 | 1,000.00 | 106-31 | ||
| 10/09/79 | 1,000.00 | 106-32 | ||
| 10/17/79 | 900.00 | Central Ohio #1 | Ck 128 | |
| 10/31/79 | 2,800.00 | Freedom Fuel | ||
| 11/13/79 | 3,000.00 | TIC | Ck 3128 | |
| 11/16/79 | 4,000.00 | |||
| 11/20/79 | 5,000.00 | TIC | Ck 3242 | |
| 11/27/79 | 3,000.00 | TIC | Ck 3254 | |
| 12/07/79 | 3,000.00 | TIC | Ck 3348 | |
| 12/13/79 | 2,000.00 | Freedom Fuel | ||
| 12/21/79 | 3,000.00 | Freedom Fuel | Ck 1004 | |
| 12/24/79 | 3,000.00 | Freedom Fuel | Ck 1003 | |
| $ 53,015.14 | Total Deposits | |||
| (33,450.00) | Transfers | |||
| $ 19,565.14 | Deposits per deficiency notice | |||
*173 Amounts in brackets [] are not included in totals.
| GROUP LEGAL PLAN | ||||
| Quaker City National Bank | ||||
| a/c 069-195-6 | ||||
| 1979 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 04/05/79 | 2,000.00 | FHIS | Ck 156 | |
| 06/28/79 | 4,500.00 | TIC | Ck 2341 | |
| 07/12/79 | 3,350.00 | TIC | Ck 2401 | |
| 07/27/79 | 3,000.00 | TIC | Ck 114; $ 2,000 | |
| 08/03/79 | 1,000.00 | FHIS | Ck 175 | |
| 08/03/79 | 1,000.00 | FHIS | Ck 177 | |
| 08/10/79 | 600.00 | FHIS | Ck 178 | |
| 08/10/79 | 4,300.00 | 106-33 | ||
| 09/04/79 | 414.44 | 106-34 | ||
| 12/03/79 | 750.00 | 106-35 | ||
| 12/12/79 | 700.00 | TIC | Ck 3377 | |
| 12/21/79 | 700.00 | TIC | Ck 3447 | |
| $ 22,314.44 | Total deposits | |||
| (16,850.00) | Transfers allowed by respondent | |||
| $ 5,464.44 | Deposits per notice of deficiency | |||
| TIC OFFICE ACCOUNT | ||||
| Quaker City National Bank | ||||
| a/c 100-181-7 | ||||
| 1979 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 02/01/79 | 263.90 | |||
| 02/02/79 | 3,000.00 | TIC | Ck 2022 | |
| 02/06/79 | 2,675.00 | |||
| 02/09/79 | 4,000.00 | LBS | Ck 640 | |
| 03/02/79 | 25,000.00 | 106-15 | ||
| 03/21/79 | 5,000.00 | Casa Serena | Debit memo | |
| 03/21/79 | 5,800.00 | TIC | Ck 101 | |
| 03/26/79 | 1,417.53 | |||
| 03/26/79 | 10,000.00 | Precious Metals | 106-7, -17 | |
| 03/27/79 | 3,000.00 | * | ||
| 03/27/79 | 720.75 | |||
| 03/31/79 | 1,739.50 | |||
| 05/21/79 | 1,000.00 | TIC | Ck 1462 | |
| 06/18/79 | [1,000.00] | Credit memo | ||
| 06/27/79 | 1,000.00 | Lake Middlebourne | Ck 192 | 106-18 |
| 08/07/79 | 200.00 | Lake Middlebourne | Ck 280 | |
| 08/15/79 | 500.00 | TIC | ||
| 08/24/79 | 100.00 | TIC | ||
| 08/27/79 | 600.00 | TIC | Ck 2672 | |
| $ 66,016.68 | Total Deposits | |||
| (15,000.00) | Transfers allowed by respondent | |||
| $ 51,061.68 | Income per notice of deficiency | |||
| MLJ TRUST | ||||
| Quaker City National Bank | ||||
| a/c 084-507-3 | ||||
| 1979 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/10/79 | 100.00 | 106-26 | ||
| 02/05/79 | 135.45 | |||
| 02/07/79 | 1,000.00 | |||
| 02/28/79 | 500.00 | TIC | Ck 1177 | |
| 04/16/79 | 500.00 | FHIS | Ck 157 | 106-23 |
| 04/26/79 | 200.00 | 106-24 | ||
| 05/01/79 | 50.00 | |||
| 05/04/79 | 400.00 | 106-25 | ||
| 05/07/79 | 400.00 | 106-27 | ||
| 05/15/79 | 100.00 | |||
| 06/07/79 | 756.74 | |||
| 06/21/79 | 223.00 | |||
| 07/06/79 | 330.00 | |||
| 07/16/79 | 300.00 | TIC | Ck 2441 | |
| 07/20/79 | 360.00 | |||
| 07/27/79 | 461.58 | |||
| 08/03/79 | 1,474.80 | |||
| 08/24/79 | 130.00 | |||
| 08/27/79 | 120.69 | |||
| 09/06/79 | 104.82 | |||
| 09/11/79 | 300.00 | |||
| 09/17/79 | 200.00 | TIC | Ck 2807 | |
| 09/24/79 | 640.00 | FHIS | Ck 191 | |
| 09/26/79 | 45.00 | |||
| 09/26/79 | 380.00 | 106-22 | ||
| 10/04/79 | 220.50 | |||
| 10/12/79 | 26.05 | |||
| 10/19/79 | 300.00 | FHIS | ||
| 11/01/79 | 77,500.00 | Casa Serena ($ 59,300) | 106-21, -28, -29 | |
| Leverage Leasing (18,200) | ||||
| 11/02/79 | 170.00 | |||
| 11/05/79 | 300.00 | |||
| 11/16/79 | 300.00 | |||
| 11/21/79 | 400.00 | |||
| 12/04/79 | 146.54 | |||
| 12/10/79 | 72.00 | |||
| 12/10/79 | 150.00 | |||
| 12/12/79 | 595.17 | |||
| 12/14/79 | 299.40 | |||
| 12/24/79 | 1,137.58 | |||
| $ 90,829.31 | Total Deposits | |||
| (2,440.00) | Transfers allowed by respondent | |||
| $88,389.31 | Income per notice of deficiency | |||
| TAX INFORMATION CENTER | |||||
| Quaker City National Bank | |||||
| a/c 099-237-5 | |||||
| 1979 Deposits | |||||
| 01/04/79 | $ 10,000.00 | 04/23/79 | n7 10,000.00 | 07/05/79 | 21,223.25 |
| 01/10/79 | A 9,000.00 | 04/24/79 | 9,509.75 | 07/06/79 | 173.11 |
| 01/17/79 | B 6,000.00 | 04/25/79 | 482.00 | 07/06/79 | 5,000.00 |
| 01/22/79 | 11,711.65 | 04/26/79 | 4,800.00 | 07/06/79 | 15,575.00 |
| 10/31/79 | 76,340.53 | 04/27/79 | 96.46 | 07/09/79 | 2,157.00 |
| 02/05/79 | 175.25 | 04/27/79 | 856.75 | 07/09/79 | 2,839.25 |
| 02/05/79 | 15,470.00 | 04/30/79 | 153.50 | 07/10/79 | 500.00 |
| 02/06/79 | 1,274.86 | 04/30/79 | 257.00 | 07/12/79 | 1,829.00 |
| 02/07/79 | 1,569.00 | 05/01/79 | n8 20,815.00 | 07/12/79 | n13 11,200.00 |
| 02/07/79 | n1 12,052.95 | 05/04/79 | 1,115.00 | 07/13/79 | 6,129.75 |
| 02/09/79 | 10,299.25 | 05/04/79 | 4,578.57 | 07/16/79 | 533.00 |
| 02/12/79 | 536.75 | 05/04/79 | 10,330.00 | 07/17/79 | 1,055.00 |
| 02/13/79 | 17,307.25 | 05/07/79 | 202.50 | 07/17/79 | 2,886.00 |
| 02/15/79 | 696.50 | 05/07/79 | 2,284.90 | 07/19/79 | 2,500.00 |
| 02/16/79 | 310.00 | 05/08/79 | 380.00 | 07/19/79 | 6,000.00 |
| 02/20/79 | 800.00 | 05/01/79 | 3,627.97 | 07/20/79 | 150.00 |
| 02/20/79 | 2,576.45 | 05/09/79 | 722.75 | 07/20/79 | 637.50 |
| 02/21/79 | 411.58 | 05/09/79 | 1,163.84 | 07/23/79 | 1,783.00 |
| 02/21/79 | 25,053.00 | 05/11/79 | 6,750.00 | 07/23/79 | 2,161.34 |
| 02/23/79 | 680.50 | 05/11/79 | 12,161.97 | 07/25/79 | 1,260.79 |
| 02/26/79 | 2,677.03 | 05/14/79 | 185.50 | 07/25/79 | 3,622.50 |
| 02/26/79 | 17,462.00 | 05/14/79 | 12,479.04 | 07/27/79 | 379.00 |
| 02/27/79 | 4,237.00 | 05/15/79 | 2,290.00 | 07/27/79 | n14 10,000.00 |
| 02/28/79 | 1,650.00 | 05/16/79 | 2,618.00 | 07/30/79 | 1,074.50 |
| 03/02/79 | 1,109.75 | 05/17/79 | 345.00 | 07/30/79 | 2,543.00 |
| 03/07/79 | 8,750.00 | 05/18/79 | 525.75 | 07/30/79 | n15 20,099.50 |
| 03/09/79 | 9,030.75 | 05/21/79 | 245.00 | 08/01/79 | 8,271.00 |
| 03/12/79 | 39.00 | 05/21/79 | 6,595.75 | 08/02/79 | 44.00 |
| 03/15/79 | 1,162.74 | 05/22/79 | 8,059.27 | 08/03/79 | 6,505.50 |
| 03/15/79 | n2 9,159.41 | 05/23/79 | 500.00 | 08/03/79 | 6,168.75 |
| 03/19/79 | n3 1,379.25 | 05/23/79 | n9 11,427.17 | 08/06/79 | 1,705.25 |
| 03/21/79 | n4 5,050.00 | 05/25/79 | 9,386.30 | 08/07/79 | 229.50 |
| 03/21/79 | 6,253.60 | 05/25/79 | 9,817.80 | 08/07/79 | 1,036.00 |
| 03/26/79 | n5 10,000.00 | 05/31/79 | 352.79 | 08/10/79 | 87.50 |
| 03/27/79 | 4,311.00 | 06/01/79 | n10 40,000.00 | 08/10/79 | 150.00 |
| 03/28/79 | 1.50 | 06/04/79 | 73.00 | 08/10/79 | 209.00 |
| 04/02/79 | 1,272.84 | 06/04/79 | 568.50 | 08/10/79 | 260.00 |
| 04/02/79 | 6,267.70 | 06/04/79 | 1,237.50 | 08/10/79 | 685.00 |
| 04/05/79 | 1,705.00 | 06/04/79 | 6,143.50 | 08/10/79 | n16 8,149.75 |
| 04/09/79 | 3,917.12 | 06/05/79 | 2,233.50 | 08/15/79 | n17 4,000.00 |
| 04/09/79 | n6 4,659.50 | 06/05/79 | 5,380.50 | 08/17/79 | 212.75 |
| 04/10/79 | 518.75 | 06/06/79 | 656.75 | 08/17/79 | 219.00 |
| 04/40/79 | 5,000.00 | 06/06/79 | 683.50 | 08/17/79 | n18 3,000.00 |
| 04/11/79 | 62.50 | 06/06/79 | 984.00 | 08/20/79 | 379.75 |
| 04/13/79 | 232.55 | 06/06/79 | 2,163.00 | 08/21/79 | 5,068.00 |
| 04/13/79 | 1,117.00 | 06/07/79 | 1,250.00 | 08/24/79 | 127.80 |
| 04/13/79 | 3,090.00 | 06/08/79 | 3,058.50 | 08/24/79 | 180.25 |
| 04/16/79 | 716.50 | 06/08/79 | n11 40,000.00 | 08/24/79 | 9,118.76 |
| 04/17/79 | 346.25 | * * 08/27/79 | 10,871.00 | ||
| 04/18/79 | 1,500.00 | 06/25/79 are missing | * * | ||
| 04/18/79 | 7,990.34 | 06/27/79 | 145.50 | 10/22/79 are missing | |
| 04/19/79 | 50.00 | 06/27/79 | 399.00 | 10/23/79 | 806.75 |
| 04/19/79 | 206.00 | 06/27/79 | 5,000.00 | 10/23/79 | 1,645.47 |
| 04/20/79 | 161.50 | 06/28/79 | n12 10,052.50 | 10/24/79 | 844.35 |
| 04/23/79 | 67.25 | 06/29/79 | 897.50 | 10/24/79 | 5,041.50 |
| 04/23/79 | 1,297.50 | 07/05/79 | 540.00 | 10/24/79 | 13,374.50 |
| 04/23/79 | 7,588.03 | 07/05/79 | 5,000.00 | 10/26/79 | 4,556.25 |
| 10/29/79 | 8,674.95 | 11/16/79 | 2,558.50 | 12/07/79 | 8,930.00 |
| 10/29/79 | 18,548.00 | 11/16/79 | 12,539.70 | 12/07/79 | 11,206.00 |
| 10/30/79 | 2,653.00 | 11/20/79 | 6,424.00 | 12/07/79 | 12,232.75 |
| 10/31/79 | 1,011.00 | 11/23/79 | 8,952.68 | 12/10/79 | 5,785.41 |
| 11/01/79 | 3,947.00 | 11/26/79 | 5,132.26 | 12/10/79 | 13,765.30 |
| 11/02/79 | 3,007.00 | 11/27/79 | 8,511.75 | 12/10/79 | 39,168.50 |
| 11/05/79 | 2,608.30 | 11/27/79 | 15,000.00 | 12/12/79 | 77.80 |
| 11/05/79 | 7,146.25 | 11/28/79 | 7,586.75 | 12/12/79 | 5,176.95 |
| 11/06/79 | 4,044.59 | 11/30/79 | 15,339.25 | 12/14/79 | 12,426.00 |
| 11/06/79 | 7,117.25 | 12/03/79 | 3,212.50 | 12/18/79 | 13,076.55 |
| 11/08/79 | n19 12,052.05 | 12/03/79 | n21 5,000.00 | 12/18/79 | 60,888.25 |
| 11/09/79 | 463.00 | 12/03/79 | 5,043.75 | 12/19/79 | 1,000.00 |
| 11/13/79 | 409.77 | 12/03/79 | 8,100.00 | 12/21/79 | 14,912.45 |
| 11/13/79 | 21,899.30 | 12/04/79 | 2,542.00 | 12/21/79 | 28,214.20 |
| 11/13/79 | n20 25,000.00 | 12/04/79 | 7,424.80 | * * *12/22/79 through | |
| 11/13/79 | 64,811.50 | 12/05/79 | 8,051.31 | 12/28/79 are missing | |
| 11/16/79 | 2,137.50 | 12/06/79 | 5,563.65 | 12/29/79 | 9,858.50 |
| 12/29/79 | 4,623.75 | ||||
| 12/31/79 | 1,401.16 | ||||
| Total Deposits | $ 1,385,402.77 | ||||
*176 Add: "Distributions from trusts, partnerships, etc. not reflected in the deposits but verified by credit documents."
| Appendix B | ||||
| Item No. | ||||
| Lake Middlebourne | 06/15/79 | Debit Memo | 20,000.00 | |
| 106-2 | Casa Serena II | 09/07/79 | Ck. 101 | 16,900.00 |
| Casa Serena I | 09/07/79 | Ck. 109 | 10,000.00 | |
| Casa Serena I | 09/14/79 | Ck. 114 | 10,000.00 | |
| Lake Estates | 10/02/79 | Ck. 108 | 8,000.00 | |
| La Oficina | 10/08/79 | Ck. 101 | 15,000.00 | |
| 106-12 | Casa Serena II | 10/10/79 | Ck. 103 | 10,000.00 |
| Central Ohio #1 | 10/12/79 | Ck. 126 | 10,000.00 | |
| Casa Serena II | 10/18/79 | Debit Memo | 15,000.00 | |
| Subtotal | $ 1,500,302.77 | |||
| Transfers | (13,000.00) | |||
| Income per Deposit | ||||
| Schedule | $ 1,487,302.77 | |||
| Unexplained variance | (.01) | |||
| Income per notice of | ||||
| Deficiency | $ 1,487,302.76 | |||
The following transfers, as numbered below, were included in the deposit above at the corresponding number. The deposits were considered income distributions from the respective trusts to petitioners because the funds were used to pay the personal and business expenses of their proprietorships.
| APPENDIX | |||
| NO. | DRAWER | ANNOTATION | ITEM NO. |
| 1 | Lake Middlebourne | Ck. 109; $ 2,031.45 | |
| 2 | Precious Metals | Ck. 121 | |
| 3 | Precious Metals | Ck. 124; $ 610.00 | |
| 4 | Casa Serena II | Debit Memo | |
| 5 | Precious Metals | Debit Memo | 106-7, -16, -17 |
| 6 | Hamilton Rd. Pshp. | Ck. 126; $ 2,588.62 | 106-1 |
| 7 | Casa Serena | Debit Memo | |
| 8 | Precious Metals | Ck. 130; $ 20,000.00 | |
| 9 | Lake Middlebourne | Ck. 139; $ 10,000.00 | |
| 10 | Lake Middlebourne | Credit Memo | |
| 11 | Lake Middlebourne | Debit Memo | 106-6 |
| 12 | Lake Middlebourne | Ck. 194; $ 5,000.00 | |
| 13 | Lake Middlebourne | Credit Memo | |
| 14 | Casa Serena I | Ck. 101 | |
| 15 | Casa Serena I | Ck. 102; $ 15,000.00 | |
| 16 | Precious Metals | Ck. 150; $ 8,000.00 | |
| 17 | Precious Metals | Ck. 153 | |
| 18 | Lake Middlebourne | Ck. 303 | |
| 19 | Freedom Fuel | Ck. 104 | |
| 20 | Casa Serena I | Ck. 108 | 106-3 |
| 21 | Freedom Fuel | Ck. 105 |
*177 From the checks petitioners presented, we have identified the following additional checks deposited in petitioners' accounts.
| APPENDIX B | ||||
| DATE | TRANSFERRED FROM | TRANSFERRED TO | AMOUNT | ITEM NUMBER |
| 1/09/79 | TIC Office Account | TIC | $ 9,000.00 | 106-13 |
| 1/16/79 | TIC Office Account | TIC | 6,000.00 | 106-14 |
| 2/13/79 | Casa Serena | Fry/TIC | 10,000.00 | 106-8 |
| 2/20/79 | Casa Serena | Fry/TIC | 25,000.00 | 106-9 |
| 4/20/79 | Lake Middlebourne | TIC | 1,297.50 | 106-5 |
| 4/26/79 | Lake Middlebourne | TIC | 5,000.00 | 106-11 |
| 12/10/79 | Tall Timbers | TIC | 5,785,41 | 106-10 |
| CASHIER'S CHECKS | ||||
| 1979 | ||||
| APPENDIX B | ||||
| ITEM | ||||
| DATE | PAYEE | AMOUNT | NOTATION | NUMBER |
| 02/21/79 | Phillip Fry | 45,000.00 | Co-endorsed by | |
| F.M., Atty. | 106-36 | |||
| 03/02/79 | EP Realty | 5,000.00 + | 106-37 | |
| 04/20/79 | Arizona Bank | 5,000.00 | ||
| 05/18/79 | Phillip Fry | 30,000.00 + | Down Payment on | |
| KIKO acreage | 106-38 | |||
| 11/06/79 | IBM Corp. | 2,995.20 + | 106-40 | |
| 12/07/79 | Phillip Fry | 134,000.00 + | Down Payment on Tall | |
| Timbers Mobile Home Park | ||||
| 12/10/79 | Phillip Fry | 129,515.00 | Co-endorsed by | |
| E & B, Attys. | ||||
| 12/13/79 | Phillip Fry | 7,180.91 | ||
| 12/28/79 | DW Trust A/c | 138,000.00 + | 106-39 | |
| $ 496,691.11 | Total cashier's checks | |||
| (.01) | Unexplained variance | |||
| $ 496,691.10 | Income per notice of deficiency | |||
| GUERNSEY LUMBER COMPANY | ||||
| Quaker City National Bank | ||||
| A/c 069-872-0 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 08/08/80 | 7,000.00 | 107-158 | ||
| 08/22/80 | 5,800.00 | 107-154 | ||
| 09/15/80 | MLJ/ML | Ck. 221 | ||
| 09/15/80 | 1,600.00 | 107-159 | ||
| 09/19/80 | 4,300.00 | 107-155 | ||
| 10/03/80 | 4,700.00 | 107-143 | ||
| 10/15/80 | 2,315.77 | 107-156 | ||
| 10/17/80 | 5,160.82 | |||
| 10/31/80 | 1,000.00 | 107-144 | ||
| 10/31/80 | 8,053.94 | |||
| 11/14/80 | 9,646.72 | |||
| 11/18/80 | 4,331.34 | |||
| 11/26/80 | 10,000.00 | 107-142 | ||
| 12/12/80 | 15,000.00 | 107-149 | ||
| 12/15/80 | 5,394.77 | 107-148 | ||
| 12/17/80 | 1,500.00 | 107-150 | ||
| 12/29/80 | 10,400.00 | 107-153 | ||
| $ 100,953.36 | Total deposits | |||
| Transfers allowed by respondent | ||||
| $ 96,203.36 | Income per notice of deficiency | |||
| MLJ/MERRILL LYNCH ACCOUNT | ||||
| 1980 DEPOSITS | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/15/80 | $ 100,000.00 | 107-91 | ||
| 02/22/80 | 126,361.66 | |||
| 03/07/80 | 40,000.00 | Freedom Fuel | Debit memo | 107-90 |
| 05/14/80 | 230,000.00 | Fry, Az. account | Ck 120 | |
| 05/20/80 | 30,000.00 | Fry, Az. account | Ck 153 | |
| 05/22/80 | 107-87 | |||
| 07/03/80 | 25,000.00 | Sports paradise | Ck 1001 | 107-85 |
| 07/03/80 | 30,000.00 | Leverage Leasing | Ck 164 | 107-92 |
| 07/11/80 | 40,000.00 | MLJ Trust | Ck 671 | |
| 07/28/80 | 4,000.00 | MLJ Trust | Ck 682 | |
| 07/29/80 | 20,000.00 | MLJ Trust | Ck 686 | |
| 07/30/80 | 11,000.00 | MLJ Trust | Ck 686 | |
| 08/05/80 | 402.944.31 | |||
| 10/06/80 | 30,000.00 | MLJ Trust | Ck 801 | |
| 5/22/80 Deposit reversed out | ||||
| 20,724.00 | 10/27/80 Deposit omitted | |||
| $ 1,110,029.97 | Total deposits excluding interest | |||
| (405,000.00) | Less transfers allowed by respondent | |||
| $ 705,029.97 | Income per notice of deficiency | |||
| 10,284.00 | Interest earned | |||
| $ 715,313.97 | Total income deposits | |||
| GROUP LEGAL PLAN OF FHIS | ||||
| Quaker City National Bank | ||||
| a/c 069-195-6 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/14/80 | $ 750.00 | 107-113 | ||
| 01/25/80 | 700.00 | 107-112 | ||
| 02/08/80 | 700.00 | TIC | Ck 4718 | |
| 02/22/80 | 700.00 | 107-124 | ||
| 03/07/80 | 700.00 | TIC | Ck 4901 | |
| 03/21/80 | 700.00 | TIC | Ck 5002 | |
| 04/07/80 | 700.00 | 107-125 | ||
| 04/18/80 | 700.00 | 107-127 | ||
| 05/02/80 | 700.00 | Leverage Leasing | Ck 130 | 107-136 |
| 05/14/80 | 221.37 | |||
| 05/16/80 | 700.00 | TIC | 107-135 | |
| 05/30/80 | 700.00 | 107-128 | ||
| 06/16/80 | 700.00 | 107-129 | ||
| 06/30/80 | 700.00 | 107-130 | ||
| 07/11/80 | 700.00 | 107-131 | ||
| 07/15/80 | 250.00 | 107-134 | ||
| 07/25/80 | 700.00 | 107-120 | ||
| 08/08/80 | 900.00 | 107-132 | ||
| 08/22/80 | 800.00 | 107-121 | ||
| 09/05/80 | 1,455.22 | MLJ/Merrill Lynch | Ck 222 | |
| 09/09/80 | 350.00 | 107-122 | ||
| 09/19/80 | 2,200.00 | |||
| 10/03/80 | 2,200.00 | 107-114 | ||
| 10/16/80 | 2,155.22 | 107-123 | ||
| 10/31/80 | 1,719.22 | 107-115 | ||
| 11/14/80 | 1,544.22 | 107-116 | ||
| 11/26/80 | 1,625.49 | 107-117 | ||
| 12/12/80 | 2,538.89 | 107-118 | ||
| 12/29/80 | 1,700.00 | 107-119 | ||
| $ 31,709.63 | Total deposits | |||
| (4,255.22) | Transfers allowed by respondent | |||
| $ 27,454.41 | Income per notice of deficiency | |||
| ORLANDO ADVERTISING | ||||
| QUAKER CITY NATIONAL BANK | ||||
| a/c 089-810-6 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/02/80 | $ 3,000.00 | TIC | Debit memo | |
| 01/14/80 | 5,000.00 | Freedom Fuel | Ck. 1009 | 107-104 |
| 01/15/80 | 380.37 | |||
| 01/21/80 | 79.80 | |||
| 01/21/80 | 10,000.00 | Tall Timbers | Ck 1001 | 107-94 |
| 02/01/80 | 177.12 | |||
| 02/04/80 | 10,000.00 | Freedom Fuel | Debit memo | 107-103 |
| 02/06/80 | 200.00 | TIC | Ck 4089 | 107-101 |
| 03/10/80 | 3,000.00 | Freedom Fuel | Ck 1034 | |
| 03/24.80 | 5,000.00 | MLJ/Merrill Lynch | Ck 78 | |
| 04/04/80 | 5,000.00 | |||
| 04/08/80 | 95.73 | |||
| 04/14/80 | 10,000.00 | |||
| 04/23/80 | 3,100.00 | Freedom Fuel | Ck 1042 | 107-102 |
| 04/28/80 | 21.78 | |||
| 05/20/80 | 27.49 | |||
| 06/16/80 | 1,900.00 | MLJ/Merrill Lynch | Ck 148 | |
| 06/20/80 | 75.33 | |||
| 07/15/80 | 108.81 | |||
| 07/15/80 | 297.18 | |||
| 07/21/80 | 700.00 | MLJ/Merrill Lynch | Ck 180 | |
| 08/05/80 | 382.22 | |||
| 09/02/80 | 2,500.00 | Leverage Leasing | Ck 195 | 107-105 |
| 09/17/80 | 1,500.00 | 107-98 | ||
| 09/24/80 | 1,000.00 | 107-95 | ||
| 10/10/80 | 1,000.00 | 107-99 | ||
| 10/17/80 | 1,516.07 | |||
| 10/21/80 | 1,500.00 | 107-100 | ||
| 10/24/80 | 1,500.00 | Leverage Leasing | Ck 207 | 107-106 |
| 10/27/80 | 3,000.00 | Leverage Leasing | Ck 210 | 107-107 |
| 11/03/80 | 4,500.00 | Leverage Leasing | Ck 215 | 107-108 |
| 11/12/80 | 4,500.00 | Leverage Leasing | Ck 220 | 107-109 |
| 11/14/80 | 3,000.00 | Leverage Leasing | Ck 225 | 107-110 |
| 11/18/80 | 20.22 | |||
| 11/21/80 | 533.36 | |||
| 11/25/80 | 825.00 | 107-96 | ||
| 12/02/80 | 1,250.00 | Leverage Leasing | Ck 242 | 107-111 |
| 12/11/80 | 2,130.00 | 107-97 | ||
| 12/22/80 | 20.22 | |||
| 12/22/80 | 218.25 | |||
| 12/30/80 | 76.12 | |||
| 12/31/80 | 1,600.00 | TIC | ||
| $ 90,735.07 | Total deposits | |||
| (31,900.00) | Transfers allowed by respondent | |||
| $ 58,835.07 | Income per notice of deficiency | |||
| TIC OFFICE ACCOUNT | ||||
| Quaker City National Bank | ||||
| a/c 100-181-7 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 03/18/80 | $ 2,000.00 | TIC | Ck 4961 | |
| 03/24/80 | 1,047.80 | TIC | Ck 4988 | |
| 03/31/80 | 1,600.71 | 107-25 | ||
| 04/08/80 | 2,103.88 | 107-27 | ||
| 04/14/80 | 1,905.60 | 107-26 | ||
| 40/18/80 | 3,507.15 | TIC | ||
| From individual credit items | ||||
| 05/01/80 | 3,450.00 | Leverage Leasing | Ck 131 | 107-43 |
| 06/12/80 | 4,000.00 | Leverage Leasing | Ck 156 | 107-44 |
| 07/08/80 | 2,000.00 | Freedom Fuel Corp | Ck 1080 | 107-52 |
| 07/31/80 | 5,000.00 | Leverage Leasing | Debit Memo | 107-51 |
| 08/04/80 | 4,509.90 | Leverage Leasing | Ck 177 | 107-45 |
| 08/07/80 | 6,000.00 | Leverage Leasing | Ck 179 | 107-46 |
| 08/20/80 | 1,500.00 | Leverage Leasing | Debit Memo | 107-50 |
| 08/25/80 | 1,000.00 | Leverage Leasing | Ck 188 | 107-47 |
| 08/28/80 | 1,000.00 | Leverage Leasing | Ck 192 | 107-48 |
| 11/06/80 | 6,263.65 | Leverage Leasing | Ck 219 | 107-49 |
| $ 46,888.69 | Total deposits | |||
| (8,554.95) | Less Transfers allowed by respondent | |||
| $ 38,333.74 | Subtotal | |||
| .10 | Unexplained variance | |||
| $ 38,333.84 | Income per Notice of Deficiency | |||
| Monthly statements for February, May, | ||||
| June, July, August, September, October, | ||||
| November, and December were missing. | ||||
| TAX INFORMATION CENTER | ||||
| QUAKER CITY NATIONAL BANK | ||||
| a/c 099-273-5 | ||||
| 1980 DEPOSITS | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| * * * | * * * | |||
| January 1 through January 28 are missing | ||||
| * * * | * * * | |||
| 01/29/80 | 2,882.07 | |||
| 02/01/80 | 10,000.00 | |||
| 02/01/80 | 15,153.50 | |||
| 02/04/80 | 5,416.00 | |||
| 02/04/80 | 7,154.50 | |||
| 02/05/08 | 1,250.00 | |||
| 02/06/80 | 85.50 | |||
| 02/06/80 | 171.50 | |||
| 02/06/80 | 7,500.00 | |||
| 02/07/80 | 3,567.00 | |||
| 02/07/80 | 13,700.00 | Freedom Fuel Corp | Ck 1015; $ 14,000 | 107-16 |
| 02/08/80 | 2,601.75 | |||
| 02/11/80 | 1,387.50 | |||
| 02/12/80 | 192.00 | |||
| 02/13/80 | 11,277.75 | |||
| 02/19/80 | 769.96 | |||
| 02/19/80 | 12,890.00 | |||
| 02/20/80 | 9,909.25 | |||
| 02/22/80 | 366.00 | |||
| 02/22/80 | 26,579.95 | MLJ/Merrill Lynch | Per credit memo | |
| 02/25/80 | 10,000.00 | 107-13 | ||
| 02/25/80 | 16,970.58 | |||
| 02/26/80 | 24,625.42 | 107-7 | ||
| 02/27/80 | 1,885.00 | |||
| 02/28/80 | 1,560.75 | |||
| 02/29/80 | 185.00 | |||
| 02/29/80 | 1,071.40 | |||
| 02/29/80 | 40,000.00 | 107-8 | ||
| 03/04/80 | 1,015.00 | |||
| 03/04/80 | 11,723.78 | |||
| 03/07/80 | 9,436.25 | $ 6,200 | 107-24 | |
| 03/10/80 | 1,769.50 | |||
| 03/10/80 | 8,075.00 | |||
| 03/11/80 | 4,547.00 | |||
| 03/14/80 | 4,118.75 | |||
| 03/17/80 | 1,980.47 | |||
| 03/17/80 | 10,093.33 | |||
| 03/18/80 | 4,294.00 | |||
| 03/19/80 | 901.25 | |||
| 03/19/80 | 1,000.00 | |||
| 03/21/80 | 229.60 | |||
| 03/21/80 | 1,040.75 | |||
| 03/24/80 | 1,905.25 | |||
| 03/24/80 | 2,945.13 | |||
| 03/24/80 | 26,970.33 | |||
| 03/25/80 | 1,025.00 | |||
| 03/27/80 | 3,137.84 | |||
| 03/28/80 | 1,080.10 | |||
| 03/28/80 | [3,616.20] | Credit memo -- not included in total | ||
| 03/31/80 | 5,712.00 | |||
| 03/31/80 | 8,131.63 | |||
| 03/31/80 | 30,811.16 | MLJ/Merrill Lynch | Ck 77; $ 25,000. | |
| 04/01/80 | 2,655.99 | |||
| 04/03/80 | 1,031.68 | |||
| 04/07/80 | 510.00 | |||
| 04/07/80 | 4,268.22 | |||
| 04/08/80 | 2,067.00 | |||
| 04/09/80 | 985.00 | |||
| 04/09/80 | 3,765.00 | |||
| 04/11/80 | 10,917.50 | MLJ/Merrill Lynch | Ck 81; $ 5,000. | |
| 04/14/80 | 687.50 | |||
| 04/14/80 | 5,000.00 | |||
| 04/15/80 | 1,020.00 | |||
| 04/15/80 | 1,500.00 | |||
| 04/16/80 | 19,186.72 | |||
| 04/18/80 | 2,510.00 | |||
| 04/18/80 | 4,000.00 | |||
| 04/18/80 | 5,564.20 | Tall Timbers Trust | Ck 428; $ 2,181.20 | |
| 04/18/80 | 10,000 | MLJ/Merrill Lynch | Ck 103; $ 10,000. | |
| 04/21/80 | 304.84 | |||
| 04/21/80 | 1,121.43 | |||
| 04/21/80 | 1,791.25 | |||
| 04/21/80 | 3,611.85 | |||
| 04/22/80 | 4,051.50 | |||
| 04/23/80 | 1,000.00 | |||
| 04/23/80 | 2,980.50 | |||
| 04/23/80 | 4,900.00 | |||
| 04/23/80 | 5,000.00 | |||
| 04/25/80 | 4,754.00 | |||
| 04/28/80 | 119.25 | |||
| 04/28/80 | 203.52 | |||
| 04/28/80 | 2,755.09 | |||
| 04/28/80 | 3,314.46 | |||
| * * * | * * * | |||
| 4/29 through 5/27 missing | ||||
| * * * | * * * | |||
| 05/28/80 | 5,894.00 | |||
| 05/28/80 | 6,700.00 | |||
| 05/28/80 | 6,709.21 | |||
| 05/31/80 | 303.00 | |||
| 05/31/80 | 1,825.00 | |||
| 05/31/80 | 5,000.00 | Leverage Leasing | Ck 150; $ 5,000. | 1Q7-20 |
| 06/02/80 | 3.943.50 | |||
| 06/03/80 | 5,291.75 | |||
| 06/03/80 | 8,560.75 | Sports Paradise | Ck 1009; $ 6,000 | 107-12 |
| 06/04/80 | 1,975.00 | |||
| 06/05/80 | 175.24 | |||
| 06/05/80 | 905.00 | |||
| 06/05/80 | 4,250.00 | Freedom Fuel | Ck 1048; $ 4,250 | |
| 06/05/80 | 11,125.00 | $ 9,000 | 107-15 | |
| 06/06/80 | 6,950.00 | |||
| 06/09/80 | 2,125.00 | |||
| 06/09/80 | 2,360.00 | |||
| 06/10/80 | 2,845.08 | |||
| 06/12/80 | 10,000.00 | |||
| 06/13/80 | 984.25 | |||
| 06/13/80 | 20,000.00 | |||
| 06/16/80 | 17,488.06 | MLJ/Merrill Lynch | Ck 146; $ 10,000 | |
| 06/17/80 | 500.00 | |||
| 06/19/80 | 6,293.25 | |||
| 06/19/80 | 6,809.13 | |||
| 06/20/80 | 17.00 | |||
| 06/20/80 | 979.50 | |||
| 06/20/80 | 2,250.00 | |||
| 06/23/80 | 3,002.59 | |||
| 06/23/80 | 3,500.00 | |||
| 06/23/80 | 12,568.75 | |||
| 06/24/80 | 2,864.47 | |||
| 06/25/80 | 2,587.00 | |||
| 06/27/80 | 1,006.00 | |||
| 06/27/80 | 10,000.00 | |||
| 06/30/80 | 9,400.00 | |||
| 06/30/80 | 16,562.50 | |||
| 07/01/80 | 5,698.97 | |||
| 07/02/80 | 2,490.00 | |||
| 07/02/80 | 7,062.76 | |||
| 07/02/80 | 21,126.50 | MLJ/Merrill Lynch | Ck 165, 169; | $ 20,000 |
| 07/07/80 | 536.50 | |||
| 07/07/80 | 7,551.00 | |||
| 07/08/80 | 3,060.99 | |||
| 07/10/80 | 4,301.83 | |||
| 07/11/80 | 1,500.00 | |||
| 07/11/80 | 2,293.33 | $ 2,000 | 107-3 | |
| 07/14/80 | 1,106.30 | |||
| 07/14/80 | 1,062.50 | |||
| 07/15/80 | 507.00 | |||
| 07/15/80 | 567.36 | |||
| 07/16/80 | 5,119.00 | |||
| 07/16/80 | 20,133.64 | MLJ/Merrill Lynch | Ck 178; $ 20,000 | |
| 07/18/80 | 6,257.98 | |||
| 07/21/80 | 1,500.00 | |||
| 07/21/80 | 3,125.00 | |||
| 07/21/80 | 4,208.52 | |||
| 07/21/80 | 4,339.25 | |||
| 07/21/80 | 10,000 | Leverage Leasing | Ck 170; $ 10,000 | 107-21 |
| 07/22/80 | 2,160.32 | |||
| 07/24/80 | 2,146.00 | |||
| 07/25/80 | 500.00 | |||
| 07/25/80 | 1,040.00 | |||
| 07/25/80 | 14,000.00 | Leverage Leasing | Ck 171; $ 14,000 | 107-22 |
| 07/28/80 | 6,424.42 | |||
| 07/28/80 | 11,686.74 | |||
| 07/29/80 | 9,031.63 | $ 2,000 | 107-6 | |
| 07/31/80 | 358.13 | |||
| 07/31/80 | 5,670.98 | Freedom Fuel | Ck 1097; $ 2,600 | 107-17 |
| 08/01/80 | 1,885.50 | |||
| 08/04/80 | 8,255.47 | |||
| 08/05/80 | 1,500.00 | |||
| 08/05/80 | 6,763.85 | MLJ/Merrill Lynch | Ck 187; $ 3,570.98 | |
| 08/07/80 | 1,035.00 | |||
| 08/07/80 | 2,756.23 | |||
| 08/08/80 | 6,657.00 | |||
| 08/11/80 | 1,987.66 | |||
| 08/12/80 | 1,598.00 | |||
| 08/15/80 | 3,542.75 | |||
| 08/15/80 | 6,648.55 | |||
| 08/18/80 | 29,186.52 | |||
| 08/19/80 | 4,250.00 | * * * Deposits from 8/26 through 12/31 | ||
| 08/21/80 | 4,096.00 | were missing * * * | ||
| 08/22/80 | 579.13 | |||
| 08/25/80 | 9,216.35 | |||
| $ 942.946.69 | Deposit subtotal | |||
*182
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/18/80 | $ 24,000.00 | Tradewinds Trust | Ck 1001 | 107-1 |
| 01/25/80 | 18,750.00 | Tradewinds Trust | Ck 1002 | 107-2 |
| 05/02/80 | 9,000.00 | Leverage Leasing | Ck 132 | 107-19 |
| 09/16/80 | 4,425.00 | Freedom Fuel Corp. | Ck 1118 | 107-18 |
| 10/15/80 | 6,500.00 | Leverage Leasing | Ck 202 | 107-23 |
| 10/20/80 | 9,750.00 | Hamilton Rd. Pshp | Ck 376 | 107-4 |
| $ 1,015,371.69 | Income subtotal | |||
| (128,395.98) | Less transfers allowed by respondent | |||
| (4,425.00) | Less FFC transfer | |||
| $ 882,550.71 | Income per notice of deficiency | |||
| MLJ Trust | ||||
| Quaker City National Bank | ||||
| a/c 084-507-3 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/04/80 | $ 11,250.00 | |||
| 01/15/80 | 126.90 | |||
| 02/06/80 | 844.15 | |||
| 02/08/80 | 30,000.00 | MLJ/Merrill Lynch | 107-86 | |
| 02/20/80 | 11,110.95 | |||
| 02/22/80 | 4,500.00 | |||
| 02/22/80 | 14,800.00 | MLJ/Merrill Lynch | ||
| 02/26/80 | 20,000.00 | MLJ/Merrill Lynch | ||
| 03/04/80 | 40,000.00 | MLJ/Merrill Lynch | ||
| 03/12/80 | 644.60 | |||
| 03/17/80 | 6,578.00 | |||
| 03/24/80 | 102.12 | |||
| 04/01/80 | 94.96 | |||
| 04/03/80 | 203.90 | |||
| 04/21/80 | 3,013.95 | |||
| 04/28/80 | 126.63 | |||
| 05/20/80 | 25.50 | |||
| 05/20/80 | 395.61 | |||
| 05/21/80 | 6.38 | |||
| 05/21/80 | 324.90 | |||
| 05/23/80 | 290,039.77 | |||
| 06/02/80 | 110.77 | |||
| 06/10/80 | 100.00 | |||
| 06/20/80 | 29.63 | |||
| 06/26/80 | 500.00 | TIC | Ck 163 | 107-75 |
| 07/02/80 | 210.00 | |||
| 07/02/80 | 500.00 | 107-78 | ||
| 07/08/80 | 2,608.90 | |||
| 07/10/80 | 40,000 | Leverage Leasing | Ck 169 | 107-80 |
| 07/28/80 | 4,000.00 | Casa Serena | Ck 118 | 107-65 |
| 07/29/80 | 21.19 | |||
| 07/29/80 | 85.05 | |||
| 07/29/80 | 20,000 | Leverage Leasing | Ck 172 | 107-81 |
| 07/31/80 | 11,000 | Casa Serene | Ck 119 | 107-68 |
| 08/05/80 | 200.00 | |||
| 08/08/80 | 208.96 | TIC | $ 200.00 | 107-77 |
| 08/11/80 | 411.92 | |||
| 08/19/80 | 72.00 | |||
| 08/26/80 | 44.11 | |||
| 08/26/80 | 156.95 | Lake Middlebourne | Ck 973 | 107-57 |
| 08/27/80 | 795.00 | Lake Middlebourne | Ck 934 | 107-58 |
| 08/29/80 | 4,087.60 | Tall Timbers Trust | Ck 565; $ 1,558 | 107-62 |
| Tradewinds Trust | Ck 297; $ 330 | 107-61 | ||
| 09/05/ 80 | 104.22 | |||
| 09/05/80 | 273.00 | |||
| 09/15/80 | 100.00 | |||
| 09/15/80 | 3,160.00 | 107-76 | ||
| 09/17/80 | 416.37 | |||
| 09/22/80 | 1,500.00 | |||
| 09/25/80 | 20,000.00 | Fantasyland Trust | Ck 101-A | 107-54 |
| 10/01/80 | 4,575.00 | |||
| 10/02/80 | 10,000.00 | Fantasyland Trust | Ck 101 | 107-69 |
| 10/02/80 | 100.00 | |||
| 10/06/80 | 22,000.00 | Hamilton Rd. Pshp | Ck 366 | 107-56 |
| 10/07/80 | 2,708.90 | |||
| 10/07/80 | 15,000.00 | Freedom Fuel Corp. | Ck 1126 | 107-79 |
| 10/10/80 | 2,131.00 | |||
| 10/14/80 | 2,500.00 | La Oficina Trust | Ck 132 | 107-64 |
| 10/14/80 | 13.50 | |||
| 10/17/80 | 30,000.00 | Leverage Leasing | Ck 200 | 107-82 |
| 10/24/80 | 70,000.00 | Fantasyland Trust | Ck 104 | 107-72 |
| 10/28/80 | 1,784.10 | 107-59 | ||
| 10/29/80 | 15,000.00 | Leverage Leasing | Ck 211 | 107-83 |
| 11/03/80 | 20,200.00 | $ 20,000 | 107-63 | |
| 11/04/80 | 330.00 | Tradewinds Trust | Ck 366 | 107-60 |
| 11/04/80 | 29,700.00 | Fantasyland Trust | Ck 105 | 107-70 |
| 11/10/80 | 127.36 | |||
| 11/14/80 | 750.00 | |||
| 11/14/80 | 1,511.25 | |||
| 11/14/80 | 35.832.00 | 107-73 | ||
| 11/21/80 | 18.570.00 | Jordan Estates | Ck 6 | 107-67 |
| 11/21/80 | 20,000.00 | Jordan Estates | Ck 5 | 107-66 |
| 12/04/80 | 20,564.99 | Leverage Leasing | Ck 243 | 107-84 |
| 12/05/80 | 213.46 | |||
| 12/11/80 | 4,700.00 | Freedom Fuel Corp. | Ck 1156 | |
| 12/22/80 | 132.00 | |||
| 12/22/80 | 1,144.60 | |||
| 12/29/80 | 50,000.00 | Energy Lodging | Ck 103, 104 | |
| Trust | ||||
| 12/29/80 | 55,000.00 | Fantasyland Trust | Ck 107 | 107-55 |
| Freedom Fuel Corp. | Ck 1162 | |||
| 12/30/80 | 82.500.00 | Capital | ||
| Appreciation | ||||
| $ 1,061.972.15 | Total Deposits | |||
| (110,000.00) | Transfers allowed by respondent | |||
| 4,700.00 | Add back FFC transfer | |||
| $ 956,672.15.00 | Income per notice of deficiency | |||
| 27,000.00 | Transfers which did not show up as deposits | |||
| 27,000.00 | Fantasyland Trust | Ck 106 | 107-71 | |
| 15,000.00 | Amusement Concepts | Ck 101 | 107-74 | |
| TAX INFORMATION CENTER | ||||
| Banc Ohio National Bank | ||||
| a/c 000012466 | ||||
| 1980 Deposits | ||||
| APPENDIX B | ||||
| DATE | DEPOSIT | TRANSFER FROM: | OTHER ANNOTATION | ITEM NO. |
| 01/09/80 | $ 773.82 | |||
| 01/11/80 | 1,289.00 | |||
| 01/11/50 | 754.50 | |||
| 01/14/80 | 94.50 | |||
| 01/15/80 | 1,120.78 | |||
| 02/21/80 | 40.00 | |||
| 01/21/80 | 1,953.00 | |||
| 01/28/80 | 1,646.13 | |||
| 02/01/80 | 1,853.50 | |||
| 02/05/80 | 489.25 | |||
| 02/05/80 | 939.00 | |||
| 02/08/80 | 65.00 | |||
| 02/12/80 | 2,061.25 | |||
| 02/15/80 | 873.00 | |||
| 03/03/80 | 4,099.02 | |||
| 03/07/80 | 720.87 | |||
| 03/18/80 | 1,762.50 | |||
| 03/20/80 | 87.00 | |||
| 03/31/80 | 914.30 | |||
| 04/04/80 | 1,732.08 | |||
| 04/07/80 | 1,185.82 | |||
| 04/16/80 | 2,115.17 | |||
| 04/21/80 | 899.42 | |||
| 04/24/80 | 1,241.89 | |||
| 05/06/80 | 947.50 | |||
| 05/19/80 | 637.01 | |||
| 05/20/80 | 797.75 | |||
| 06/09/80 | 799.42 | |||
| 06/18/80 | 400.50 | |||
| 06/20/80 | 1,318.50 | |||
| 06/24/80 | 54.25 | |||
| 07/22/80 | 312.50 | |||
| 08/15/80 | 292.50 | |||
| 08/20/80 | 1,124.25 | |||
| 09/09/80 | 3,200.00 | 107-32 | ||
| 09/15/80 | 192.25 | |||
| 09/15/80 | 663.75 | |||
| 09/16/80 | 1,200.00 | 107-38 | ||
| 09/24/80 | 444.25 | |||
| 09/29/80 | 1,600.00 | 107-37 | ||
| 10/08/80 | 658.00 | |||
| 10/14/80 | 941.20 | |||
| 10/21/80 | 1,138.25 | |||
| 10/29/80 | 90.00 | |||
| 11/03/80 | 291.50 | |||
| 11/10/80 | 1,143.42 | |||
| 11/12/80 | 1,269.30 | The January and December bank statements | ||
| 11/19/80 | 467.35 | were missing, but individual deposit slips | ||
| 11/28/80 | 911.61 | were available. | ||
| 12/05/80 | 2,419.08 | |||
| 12/05/80 | 1,100.00 | |||
| 12/15/80 | 1,001.25 | |||
| 12/17/80 | 2,992.71 | |||
| 12/31/80 | 900.00 | |||
| $ 58,018.90 | Income per notice of deficiency | |||
| CASHIER'S CHECKS | ||||
| 1980 | ||||
| APPENDIX B | ||||
| ITEM | ||||
| DATE | PAYEE | AMOUNT | NOTATION/REMITTER | NUMBER |
| 01/03/80 | Old Natl Bank | 11,679.00 | ||
| 03/07/80 | Susan Fry | * 532.30 | W/drawn from TIC | |
| #4092 | ||||
| 03/12/80 | Allegheny Bank | * 6,355.00 | W/drawn from | |
| Increasing | ||||
| Innovative Income | ||||
| 03/31/80 | United Bank | * 24,411.78 | Precious Metals | |
| 03/10/80 | VNB Arizona | * 10,755.00 | Precious metals | |
| 06/30/80 | Putnam Transfer | + 7,273.44 | 107-166 | |
| 09/16/80 | Bank One | * 47,933.17 | $ 50,000.00 | |
| withdrawn | ||||
| from MLJ/ML-Ck 210 | ||||
| 09/18/80 | Y&F Auction | * 12,500.00 | MLJ/ML #235 | |
| 10/03/80 | Y. Trk Sales | 14,990.72 | ||
| 10/03/80 | S Purcipile | 27.50 | ||
| 10/03/80 | S Purcipile | * 2,750.00 | W/drawn from MLJ/ML | |
| #252 | ||||
| 10/16/80 | Columbus Trlr. | * 1,567.50 | W/drawn from MLJ/ML | |
| #258 | ||||
| 10/24/80 | Phillip Fry | * 62,080.00 | MLJ Trust | |
| 10/24/80 | D. Transfer | 252.28 | ||
| 10/24/80 | Booklet Publ. | 2,514.37 | ||
| 10/24/80 | Curt Kittle | * 2,500.00 | MLJ Trust | |
| 10/29/80 | Lwyrs Abstract | * 15,000.00 | MLJ Trust | |
| 10/30/80 | H Mini Golf | * 3,694.00 | Columbus Game Arcade | 107-165 |
| 12/04/80 | Phillip Fry | 5,000.00 | For Deposit-Playland | |
| Amusement Park | ||||
| 12/04/80 | Phillip Fry | 1,000.00 | For Deposit-Playland | |
| Amusement Park | ||||
| 12/04/80 | Phillip Fry | 1,000.00 | For Deposit-Playland | |
| Amusement Park | ||||
| 12/04/80 | Phillip Fry | 1,000.00 | For Deposit-Playland | |
| Amusement Park | ||||
| 12/04/80 | Phillip Fry | 1,000.00 | For Deposit-Playland | |
| Amusement Park | ||||
| 12/08/80 | Phillip Fry | 58,587.85 | Full Payment-14 | 107-74 |
| rides | ||||
| Playland Ocean City | 107-51 | |||
| + ($ 42,000 substantiated) | ||||
| 12/26/80 | Susan Fry | 5,000.00 | ||
| $ 319,403.91 | Subtotal | |||
| (190,078.75) | * Respondent considered nontaxable | |||
| on deposit schedules | ||||
| 2,000.00 | Unexplained Variance | |||
| $ 131,325.16 | Income per notice of deficiency | |||
*185 APPENDIX D
The following summaries of operating expenses, by category, are those to which petitioners are entitled.
| 1977 | |||
| Expense Category: | TIC | LBS | TOTAL |
| Advertising | 7,608 | 7,447 | 15,055 |
| Advertising/Orl. Adv. | 8,973 | 0 | 8,973 |
| Automobile | 192 | 212 | 404 |
| Books | 11,043 | 512 | 11,555 |
| Equip. repair | 390 | 141 | 531 |
| Freight | 31 | 78 | 109 |
| Indep. Contractors | 8,967 | 14,047 | 23,014 |
| Insurance | 73 | 450 | 523 |
| Meeting Rooms | 3,947 | 3,842 | 7,789 |
| Office Supplies | 4,854 | 13,076 | 17,930 |
| Postage | 2,083 | 247 | 2,330 |
| Reimbursed expenses | 492 | 5,133 | 5,625 |
| Rent | 0 | 780 | 780 |
| Repairs & Maintenance | 2,1774 | 695 | 2,869 |
| Taxes | 99 | 877 | 976 |
| Telephone | 4,211 | 4,415 | 8,626 |
| Travel | 2,964 | 5,001 | 7.965 |
| Utilities | 157 | 961 | 1,118 |
| Legal Fees | 1,050 | 0 | 1,050 |
| Miscellaneous | 40 | 828 | 868 |
| Printing | 1,249 | 0 | 1,249 |
| Subtotal | $ 60,597 | $ 58,742 | $ 119,339 |
| Depreciation | 19,038 | 0 | 19,038 |
| Total | $ 79,635 | $ 58,742 | $ 138,377 |
| 1978 | ||||
| Expense Category: | TIC | LBS | FHIS | TOTAL |
| Advertising | 24,486 | 405 | 499 | 25,390 |
| Advertising/Orl. Adv. | 13,372 | 0 | 0 | 13,372 |
| Automobile | 4,865 | 0 | 0 | 4,865 |
| Books | 2,115 | 563 | 0 | 2,678 |
| Freight | 23 | 89 | 0 | 112 |
| Indep. Contractors | 267,677 | 13,049 | 19 | 280,745 |
| Insurance | 2,092 | 353 | 0 | 2,445 |
| Meeting Rooms | 4,694 | 213 | 0 | 4,907 |
| Office Supplies | 80,906 | 0 | 0 | 80,906 |
| Postage | 3,415 | 250 | 0 | 3,665 |
| Rent | 8,173 | 2,155 | 0 | 10,328 |
| Repairs & Maintenance | 739 | 430 | 0 | 1,169 |
| Taxes | 1,177 | 0 | 0 | 1,177 |
| Telephone | 50,338 | 320 | 0 | 50,658 |
| Travel | 53,737 | 95 | 133 | 53,965 |
| Utilities | 1,997 | 149 | 0 | 2,146 |
| Interest | 3,542 | 0 | 0 | 3,542 |
| Legal Fees | 62,019 | 0 | 0 | 62,019 |
| Miscellaneous | 2,657 | 1,477 | 0 | 4,134 |
| Subtotal | $ 588,024 | $ 19,548 | $ 651 | $ 608,223 |
| Depreciation | 58,611 | 0 | 0 | 58,611 |
| Total | $ 646,635 | $ 19,548 | $ 651 | $ 666,834 |
| 1979 | |||
| Expense Category: | TIC | FHIS | TOTAL |
| Advertising | 47,693 | 142 | 47,835 |
| Advertising/Orl. Adv. | 59,789 | 0 | 59,789 |
| Automobile | 5,265 | 0 | 5,265 |
| Books | 600 | 2,253 | 2,853 |
| Freight | 1,824 | 0 | 1,824 |
| Indep. Contractors | 325,970 | 7,106 | 333,076 |
| Insurance | 17,251 | 0 | 17,251 |
| Meeting Rooms | 750 | 0 | 750 |
| Office Supplies | 170,860 | 0 | 170,860 |
| Postage | 41 | 0 | 41 |
| Rent | 16,613 | 0 | 16,613 |
| Repairs & Maintenance | 754 | 0 | 754 |
| Taxes | 11,073 | 0 | 11,073 |
| Telephone | 129,604 | 0 | 129,604 |
| Travel | 34,834 | 0 | 34,834 |
| Utilities | 6,067 | 0 | 6,067 |
| Interest | 19,667 | 0 | 19,667 |
| Legal Fees | 74,656 | 1,582 | 76,238 |
| Miscellaneous | 13,341 | 0 | 13,341 |
| Wages | 90,138 | 0 | 90,138 |
| Subtotal | $ 1,026,790 | $ 11,083 | $ 1,037,873 |
| Depreciation | 88,047 | 0 | 88,047 |
| Total | $ 1,114,837 | $ 11,083 | $ 1,125,920 |
| 1980 | |||||
| Expense Category: | TIC | MLJ | IIIM | FHIS&GLP | TOTAL |
| Advertising | 90,590 | 5,740 | 4,293 | 1,132 | 101,755 |
| Advertising/Orl. Adv. | 92,141 | 0 | 0 | 0 | 92,141 |
| Automobile | 0 | 400 | 0 | 0 | 400 |
| Books | 7,690 | 494 | 3,874 | 0 | 12,058 |
| Freight | 1,073 | 0 | 0 | 0 | 1,073 |
| Indep. Contractors | 497,479 | 3,654 | 472 | 7,924 | 509,529 |
| Insurance | 51,486 | 0 | 0 | 0 | 51,486 |
| Meeting Rooms | 10,683 | 0 | 0 | 0 | 10,683 |
| Office Supplies | 21,943 | 1,272 | 0 | 172 | 23,387 |
| Postage | 65,046 | 571 | 0 | 1,079 | 66,696 |
| Employee Expense | 6,633 | 0 | 170 | 1,772 | 8,575 |
| Repairs & Maintenance | 13,000 | 0 | 0 | 0 | 13,000 |
| Taxes | 2,279 | 3,159 | 0 | 0 | 5,438 |
| Telephone | 185,039 | 0 | 0 | 2,515 | 187,554 |
| Travel | 5,503 | 213 | 0 | 2,003 | 7,719 |
| Utilities | 13,229 | 1,299 | 0 | 0 | 14,528 |
| Interest | 516 | 0 | 0 | 0 | 516 |
| Legal Fees | 15,245 | 14,800 | 1,000 | 22,979 | 54,024 |
| Miscellaneous | 16,036 | 73 | 768 | 453 | 17,330 |
| Wages | 230,117 | 0 | 0 | 0 | 230,117 |
| Payroll Taxes | 30,591 | 0 | 0 | 0 | 30,591 |
| Subtotal | 1,356,319 | 31,675 | 10,577 | 40,029 | 1,438,600 |
| Depreciation | 92,360 | 0 | 0 | 0 | 92,360 |
| Total | $ 1,448,679 | $ 31,675 | $ 10,577 | $ 40,029 | 1,530,960 |
1. Petitioners were represented by counsel throughout the trial of this case. Counsel was permitted to withdraw after trial but before post-trial briefs were due. See
2. Unless otherwise indicated, all section references are to the Internal Revenue Code as amended and in effect for the years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
3. Petitioners resided in a home on the 120-acre property separate from TIC's buildings. Portions of these 120 acres were later developed by them into an amusement park known as Paradise Lake Amusement Park.↩
4. At the time of the trial of this case, Phillip S. Fry was incarcerated at the Federal Correction Facility in Boron, California. He was convicted upon a guilty plea of conspiracy to defraud the United States in connection with his Freedom Fuel Corporation activities. See
5. Some of the Fry books were purportedly co-authored by Susan Fry. The titles of those publications include:
"Pay No Income Tax Without Going to Jail";
"How to Disinherit The IRS and The Probate Court";
"Our Lady of Perpetual Deductions"; and
"How to Cut Your Taxes in Half by Incorporating Your Job or Business."↩
6. A representative agreement is reproduced in appendix A.↩
7. Mrs. Fry's maiden name was Orlando, hence the name Orlando Advertising.↩
8. Petitioners also operated under the following business names, either as an alter ego or as an owner officer.
a. Discount Quickprint, Inc., a/k/a Discount Development
b. Phillip S. Fry & Associates, Inc.
c. Guernsey Lumber Co.
d. Increasing Innovative Income Magazine, Inc.
e. Lawyers Publishing Company
f. National Council to Eliminate Death Taxes
g. Positive Cash Flow Network
h. Sports Paradise Family Entertainment Park
i. Talk Magazine
j. Tax Counsel, Inc.
k. The Energy Store, Inc.↩
9. The entities Mr. Fry organized are referred to by the parties variously as syndicated trusts, syndications, or syndicated entities. For convenience, we adopt their terminology herein.↩
10. The caption on the 1977 MLJ Trust return included losses from partnerships and fiduciaries as one line-item.↩
11. Nonsyndication bank accounts refer to the checking accounts of the nonsyndicated entities, i.e., the entities wholly owned by petitioner.↩
12. During the investigation of petitioners, Mr. Fry filed suit in District Court against Mr. Melaragno in his capacity as a revenue agent for damages allegedly arising out of Mr. Melaragno's attempt to determine petitioners' tax liability.↩
13. For example, one of petitioners' schedules lists "Jordan Estates" as the drawer of checks, drawn and paid by the bank in 1978, which we have listed in appendix B as numbers 105-1 and 105-2. Jordan Estates was not syndicated until 1980. Those checks were drawn on a bank account respondent included in his 1978 bank deposits analysis as belonging to Phillip S. Fry. Further, the account number is different from that shown on checks later identified as drawn on the Jordan Estates checking account during 1980.↩
14. The cashier's check ($ 1,000.00), undocumented deposits ($ 1,014,572.21), prepaid rental from Lake Middlebourne ($ 79,950.00), deposits to the Phillip S. Fry account ($ 9,451.50), Law Book Store bank deposits ($ 80,570.50), and Group Legal Plan deposits ($ 2,000.00) total $ 1,187,544.21.↩
15. Mr. Fry testified the funds were used to purchase land for the Brentwood Southern Mobile Home Park and 126 acres in Ohio in completing the tax free exchange. This same Brentwood Southern Mobile Home Park was the subject of Casa Serena Trusts I and II for which the land was purchased in July 1979.↩
*. The difference in total deposits shown above ($ 3,475,239.46) and the total deposits shown on the table on page 87 ($ 3,525,963.46) is the error adjustments ($ 50,724.00), which do not constitute taxable income.↩
16. The depreciation expense shown in appendix D includes building depreciation which is not in dispute.↩
17. Respondent concedes that petitioners are entitled to investment tax credit for equipment purchased during the years in issue.↩
18. Even if we were to take the losses shown on the face of the returns and financial statements as correct, petitioners would not be entitled to deduct the claimed losses. Although the governing instrument cast the entity in the form of a trust, such form is not controlling for Federal income tax purposes, and it is clear that these entities were not "trusts" for income tax purposes.
The parties generally agree that the syndicated entities operated as limited partnerships. The parties have not raised, and we need not decide, whether the syndicated entities were partnerships or associations taxable as corporations. The distinction is unavailing in either event. If the syndicated entities were classified as associations taxable as corporations, petitioners did not file a valid subchapter S election to allow the losses to flow through to them. If the syndicated entities were partnerships, petitioners obtained their interests for past and future services and have not demonstrated a tax basis against which to claim the loss. See secs. 705, 721, 722, 742, 1011 et seq. Further, we do not address the issue of whether petitioners received additional income under section 83 for receipt of their interest in the entities they created, which could conceivably supply a partnership basis, because the issue was not raised by the parties.↩
19. The period of limitations does not begin to run until a return is filed.
*. Denotes a transfer allowed by respondent on brief.↩
*. Denotes a transfer allowed by respondent on brief.↩
x. Denotes a transfer not included in respondent's deposits analysis.↩
*. Denotes a transfer allowed by respondent on brief.↩
x. Denotes a transfer not included in respondent's deposits analysis.↩
*. Denotes a transfer allowed by respondent on brief.↩
*. Denotes transfer allowed by respondent on brief.↩
*. Denotes a transfer allowed by respondent on brief.↩
*. Only $ 3,000 of the March 13, 1978 deposit was recognized as an interaccount transfer.↩
*. The debit memo dated July 31, 1980, was in the amount of $ 500.00 not $ 5,000.00 as recorded on respondent's schedule. However, because we treat the transfers from Leverage Leasing as loans, and not income, the amount is not significant.↩
Grace M. Powell, of the Estate of O. E. Powell, Deceased v. ... , 252 F.2d 56 ( 1958 )
Condor Merritt v. Commissioner of Internal Revenue , 301 F.2d 484 ( 1962 )
Haldane M. Plunkett v. Commissioner of Internal Revenue , 465 F.2d 299 ( 1972 )
Samuel Pollack and Annie Pollack v. Commissioner of ... , 392 F.2d 409 ( 1968 )
Morrissey v. Commissioner , 56 S. Ct. 289 ( 1935 )
Burnet v. Sanford & Brooks Co. , 51 S. Ct. 150 ( 1931 )
United States v. Charles A. Esser , 520 F.2d 213 ( 1975 )
John L. Stephenson v. Commissioner of Internal Revenue , 748 F.2d 331 ( 1984 )
Robert Neaderland v. Commissioner of Internal Revenue , 424 F.2d 639 ( 1970 )
United States v. Angelo Procario , 356 F.2d 614 ( 1966 )
Robert W. Bradford v. Commissioner of Internal Revenue , 796 F.2d 303 ( 1986 )
Estate of Mary Mason, Deceased, Herbert L. Harris, ... , 566 F.2d 2 ( 1977 )
Spies v. United States , 63 S. Ct. 364 ( 1943 )
Fry v. Commissioner , 92 T.C. 368 ( 1989 )
Wichita Term. El. Co. v. Commissioner of Int. R. , 162 F.2d 513 ( 1947 )
Davis Et Ux. v. Commissioner of Internal Revenue , 184 F.2d 86 ( 1950 )
Gladys T. Geiger v. Commissioner of Internal Revenue , 440 F.2d 688 ( 1971 )
the-hicks-co-inc-etc-v-commissioner-of-internal-revenue-thomas , 470 F.2d 87 ( 1972 )
Chris D. Stoltzfus and Irma H. Stoltzfus v. United States , 398 F.2d 1002 ( 1968 )