Looked at Maestor- an 1120s. It's incorporation where income flows through to shareholder on personal tax return.
Schuch says that income that income coporation earns flows through to shareholder so corporation itself does not pay taxes. Shareholder in this case is Bernard Kilpatrick.
Looking at summary of total deposits into Maestro Associates' account: $2,231,518.14 in the period from 2002 through 2008.
Looking at list at source of deposits to Maestro. In 2005, only $35 in cash deposited into Maestro account. In 2002, there was only slightly more than $3,000 in cash deposited. None in 2003 and 2004 in terms of cash deposits.
Schuch says other money went into personal accounts.
Looking at summary of all of deposits into all of Bernard's accounts, both personal and business.
Foe example: Comerica Bank account, personal held jointly with daughter Diara
Maestro account: 2004, $147, 640
Business account: $372, 674 in 2004
Personal account: in 2004 more than $35,000 in 2007 more than $161,000
In total 9 accounts.
Total of all accounts in 2004: $882,074.70
Total of all accounts in 2007: $606,225.52.
Witness aware of Bernard's gambling activity. Analyzed bank activity against gambling winnings.
Looking at net losses/gains from gambling in 2004, 2005 and 2007.
Charts based on info from various casinos.
in 2004, net losses from gambling totaled $88,385. In 2005, total losses from gambling $87,144. In 2007, net losses of $42,322. Gambling winnings in those years offset by the losses says the witness.
Schuch determined that in 2004, 2005 and 2007 there was an understatement in Bernard's tax returns. Appears he did not report all his income says witness.
Shea stands up to object. Blackwell asks to discuss at sidebar. First one of the day.
According to Schuch, she determined that Bernard did not accurately report all his income in 2004. In his return, he reported $336,625. According to the witness's calculations, Bernard's total bank deposits were $882,074.70 in 2004. Including taxes withheld and currency expenditures, the total number was $883,067.75.
Schuch then subtracted transfer sums as well as other sums and got a Corrected Total Income of $387,019.87 that should have been reported in 2004. Thus, it came to an understatement of income by $50,394.87. Schuch says this is a conservative estimate.
In terms of tax liability for 2004, it should have been $106,681.01 and additional tax owing should have been $17,457.91. Bernard paid more than $91,000 in taxes in 2004.
Schuch says she did not find an inheritance in 2004, it was in 2002.
Inheritance from a step-brother was deposited in September 2002 according to witness.
Schuch determined Bernard's tax returns in 2005 were not accurate because they did not include disbursement. Reported income was $220,259 in 2005 per Bernard's returns. Corrected Total Income should have been $400,259. Understatement of Total income: $180,000 (2 disbursements, $100,000 had been declared by Maestro on this).