Shea says Schuch has no idea what the preparers knew or didn't know about the disbursements.
10:01AM Schuch says that the $100,000 was split into the same business accounts.
But on the same day says Shea and Jones and Young could have inquired about it.
"They could have," admits Shuch.
Now on to the 2007 tax returns. Shea says it was filed very late in 2008, last possible day of October 15th. The numbers were taken verbatim from 2006 tax return. According to testimony yesterday, this was because Kilpatrick had not provide his numbers and records to the CPA firm.
"This was intended to be a place-holder," says Shea about the fact that Bernard intended to amend that return.
Shea says but the amendment never happened.
Schuch used same bank deposit method to identify non-taxable items in 2007.
Shea going through the deductions made by the witness to calculate Kilpatrick's non-taxable income. Says she did not recalculate his business expenses based on 2006 numbers.
Shea and Shuch are butting heads. He tells the judge she is not answering his question.
Shea says economic activity for Kilpatrick increased in 2007. But says that it was the suggestion of Jones and Young that they use 2006 numbers to fill the return.
"I don't know," says Shuch.
Shea says isn't it true that typically when economic activity increases so do business expenses. Shea says he would be having business meals, using his phone more. Reasonable to expect if there is a large change in income than there would be more expenses.
Schuch again replies she doesn't know.
Shea says there were times that the firm of Alan Young & Associates did not file returns in time. Says it happened in 2 tax years.
Shuch says she knows at least one.
Shea says they did not file the corporate return for Maestro.
Shuch says that they told her they filed it but the IRS never received it. Shea skeptical that it happened if IRS didn't get it.
10:15AM Blackwell redirects.
Shuch says reliability of Kado's information does not impact reliability of bank deposit method calculations.
Shuch says she took steps, including interviews with relatives, to ensure that non-taxable items were not included in her calculations.
Blackwell referencing Shea talking about how Bernard could have hoarded cash in 2003.
Shuch says it was Maestro Associates responsibility to file the 1099R for the $180,000 amount from the disbursement in 2005.
Shuch says based on her investigations, the deposits into the accounts in 2004 and 2007 were taxable income. She stands by her numbers.
10:20AM Shea re-crosses again.