No. 69701-3-1 (consolidated with 70190-8)

COURT OF APPEALS, DIVISION I STATE OF WASHINGTON

DOUGLAS M. DEWAR,

Respondent,

v.

{;17ol-3

KENNETH SMITH and JANE DOE SMITH, husband and wife, and their marital community composed thereof; TRANER SMITH & CO. PLLC, a

Washington professional limited liability company,

Petitioners.

RESPONDENT'S BRIEF

Robert B. Gould, WSBA no. 4353 Attorney for Respondent

Law Office of Robert B. Gould 4100 194th Street SW, Suite 215

Lynnwood, W A 98036

(206) 633-4442 ,\ / .. (206) 633-4443 fax ~.

ORIGINAL

TABLE OF CONTENTS

Page

1. INTRODUCTION . ...... ........ . . . .. .... . ... . ......... . ..........

II. COUNTER STATEMENT OF THE CASE ...... .. ... .. .. . ... 4

III. SUMMARY OF ARGUMENT ....... . .......................... 11

IV. ARGUMENT .. .... . ..... . .... . . . .. ... ... .. ....................... . 13

A. Petitioners Misstate The Law Relative To The Tax Returns In Question ................... . ..... . ... .. . ..... . .. . 13

B. The Petitioners - Professional CP As - Failed As A Matter of Law To Comply With The Written Standards Of Care Of Certified Public Accountants .. . 15

C. Client Confidential Relationship Which Petitioners Rely And Use Defensively Is Belied By Their Actions And What In Fact Took Place ....... 18

D. Blaming The Return On Dewar. .......................... 19

E. Based Upon CPAs' Own Actions And Inactions, The Trial Court Correctly Concluded That They Had Engaged In Negligent Misrepresentations To Hatch And Dewar . . ............ . .. . ........... . ....... . .. .. ......... 21

F. The Applicability Of Trask v. Butler, 123 Wn.2d 835, 872 P.2d 1080 (1994) . . .. . .. . .. . ..... ... .. . . .. ...... . ...... . 24

V. CONCLUSION ........... .. . . ... ... .. . ..... . . . ... .. . , . ... ......... 26

TABLE OF AUTHORITIES

Washington Cases Pagels)

Donatelli v. D.R. Strong Consulting Engineers, 163 Wn.App. 436, 231 P.3d664(2011) .......... . .. .. . .................. . .. . .. . ..... . .. 12,23

Eriks v. Denver, 118 Wn.2d451, 824 P.2d 1207 (1992).. . .... ...... 26

ESCA Corporation, et at. , v. KPMG Peat Marwick, 135 Wn.2d 820, 959 P.2d651 (1998). .. .. ......... ... .. .... ..... .... ... ...... .. . .... . 12, 22

Roger Crane & Associates, Inc. v. Felice, 74 Wash.App. 769, 875 P.2d 705 (1994).. ... ... .. . .. . .. . .. . .. ............... .... ... .. ...... .... .. . . 13

Tegman v. Acc. & Med. Investigations Inc., 140 Wn.2d 102, 75 26,27, P.3d497 (2003)......... .. ..... .. ..... . ..... ... ..... .. . .. . ..... . ..... . ..... Footnote

3

Traskv. Butler, 123 Wn.2d 835, 872 P.2d 1080(1994) .. ... . .. .. .... 4,24,25

State Rules

RAP 10.3(6)... ...... .. .. ... .. .. .. . .. . ... . ... ... .. . . .. ... .. . .. ... . . ... . ... 13

RCW 18.04.055.. . . .. . ..... . .. .. . .. . ... ... ... .. . .. . ... . . . .. .. .. ... .. . .... 15

RCW 18.04.055(2). . .... . .. .. . . .. ... . .... . .. .. . ..... . .. . .. . ... .. ... ... .. 24

WAC 4-30........... .. ......... . .. . ......... . .. . .. . ... . . .. .. . .. .. .. . ..... 15

WAC 4-30-020 ... .. . . .. . . .. . ..... . ...... . . .. .. . .. .. ... . ..... . . .. ... .. .... 15

WAC 4-30-040... . ... ... . .. . ..... . ...... . . ....... ..... ...... . ... ...... .. 16

WAC 4-30-042.... . ..... .. .. . .. .... .. ... . .. .. .. .. .. .. . .. . ... ... . ... . .. .. 17

11

WAC4-30-048 ... . .. .... .. ....... . .... . .... ... ... .. .. ... . .. . . .. . ... ... ... 15

WPI 165.01... ... .. . ... . ..... . .. .. . .. .... .. .. ....... .. .... .. ... . ... . .. .. .. 22, 23

WPI 165.02. . . ...... . ... ... ... .. ... .. .. ... . .. ... .. . . .. ... ... ...... ... ..... 22, 24

Other Authority

AICPA AR Section 80.47 through 80.52.. ... . .. . .. .... ... . .. .. . .. . 16

AICPA ET Section 102-2... ... .. . .. ... . .. .. ..... .. ... .. .. .. .... .. . ... 11

AICPA Rule 102 and Interpretation 102-2. . ... .. ... . .......... .. ... 27

26 C.F.R. §601.506..... . ... .. .... .. . .. .. . .. ... ... . .. ... ... ....... .. ... 14, Footnote 1

31 C.F.R. §10.29. . . . .. .. . . .. .. ... . .. .. .. . ... .. ..... .. ... . ... .. ...... . .. 11

31 C.F.R. §240.17 ...... .. ... .. ... . .. .. .. ..... . .. .. .. ... .. ... . . . .... . .. . 13

Restatement (Second) of Torts §551 and §552. . . ....... .... .. .... . 12,22

Treasury Department Circular No. 230 § 1 0.22... . ... ......... . .... 19, Footnote 2

Treasury Department Circular No. 230 § 1 0.34. . ... . .... . ........ . . 19

26 U.S.C. §6501. . . .. . . .. .... ...... ... .. ... . .. .... .. .. .. .. ... .. . .. . .. .. . 10, 21

26 U.S.c. §6501(a).. ... . . .. .... ... ... . .. .. .. ... . .. . .. .... .. ... .. .. .... 10

III

APPENDIX .... . ................ . ............ . ............. .. ........... A-I

Appendix A:

Appendix B:

Appendix C:

Appendix D:

Appendix E:

Appendix F:

Appendix G:

Appendix H:

Appendix I:

Appendix J:

Appendix K:

Appendix L:

Property Settlement Agreement, effective dated 12/29/09

E-mail trail between Smith and Dewar, beginning at 10: 17am on 411511 0 and ending at 2:54pm on 4115/10

E-mail from Smith to Dewar of 4:32pm on 61711 0 with attached copy of the original filed tax return

26 U.S.C. §6501(a)

26 U.S.C. §6501

31 C.F.R. §10.29

AICP A ET Section 102-2

31 C.F.R. §240.17

26 C.F.R. §601.506

AICPA AR Section 80.47 through 80.52

Treasury Department Circular No. 230 § 1 0.22

Treasury Department Circular No. 230 § 10.34

IV

Appendix M: AICPA Rule 102 and Interpretation 102-2

v

I. INTRODUCTION

The Petitioners are professionals - Certified Public Accountants -

and have woefully failed in their duties. The Petitioner CP As (hereinafter

"CP As" or "Smith") undertook this engagement knowing or in the

exercise of reasonable care should have known that they ultimately had

conflicts of interest when Brad Beddall asked in their presence to have the

address to which the refunds were to be sent changed. They knew from the

outset that the objective ofthis undertaking was to place tax refunds of

Bradley E. Beddall's in excess of one-million dollars into the hands of

Beddall's judgment creditor, the Respondent Douglas M. Dewar

(hereinafter "Dewar"). They also knew that Beddall had granted

irrevocable special powers of attorney to his attorney in fact Jonathan

Hatch (WSBA No. 4641). Beddall knowingly and contractually gave (See

App.A, Exhibit "C", p. 21) (CP 1089):

" ... Hatch full power and authority ... to sign the Principal's 2009 Federal Tax Return and to endorse and negotiate, only for the benefit of Douglas M. Dewar ("Dewar") .. . any and all refund checks associated with the Principal's 2009 tax return along with the power to receive said refunds and checks ... .The power of attorney granted hereby is a power coupled with an interest, is an irrevocable durable power of attorney that survives the Principal ' s incompetency or death, and may be exercised by Hatch by a facsimile signature as the attorney in fact for the Principal. This

Special Power of Attorney is irrevocable and may not be terminated by the Principal or otherwise.

In this undertaking, CP As assured Beddall' s attorney Jonathan

Hatch, that the approach taken to obtain the refund was legally supportable

from a tax standpoint. Beddall's attorney, Jonathan Hatch, understandably

relied upon that assurance. Beddall gave the irrevocable power of attorney

to his attorney Hatch to allow Hatch to sign the tax return, receive the tax

refunds, and turn the proceeds over to Dewar.

The CPA's raise the pretextual defense of the accountant-client

confidential relationship. Such an argument bears no weight as they

knowingly conferred with Jonathan Hatch, with Douglas Dewar, and,

indeed, were aware that the tax returns, per the Property Settlement

Agreement between Dewar and Beddall, had to be reviewed and approved

in advance by Dewar. In fact, the tax returns were reviewed and approved

with changes by Dewar on April 15,2010.

The actions of the CP As subsequent to the preparation and filing of

the returns on April 15,2010 represent conflicts of interest. Both state and

federal law require that if a CPA has a conflict of interest they cannot

proceed with an engagement without disclosing the nature of the conflict

to all conflicted parties and receive prior written authorization from all

conflicted parties to proceed with the engagement.

2

These CP As engaged in negligent misrepresentations. There were

a total of three such negligent misrepresentations.

The first negligent misrepresentation was by way of omission in

May of 2010. At that time, Beddall called Smith, who in turn placed a call

with both of them on the line to the IRS practitioner hotline. In that call,

Beddall changed the address for the refunds from Hatch to the CPAs'

office. Smith was silent as to the change and did not inform either Hatch

or Dewar of that fact.

The second negligent misrepresentation by Smith was by

commission to Respondent Douglas Dewar on June 7, 2010. At that time,

in response to Dewar's inquiry regarding the status ofthe tax refunds,

Smith forwarded to Dewar a copy of the original filed tax return knowing

that the return had been amended and that the address shown on the return

given to Dewar, that of Jonathan Hatch, had been previously changed

from Hatch's address to the CPAs' address pursuant to the call to the IRS.

The third negligent misrepresentation by Smith, which was by

omission, took place when the CPAs received the refunds on July 9, 2010

totaling $1,206,703.32. Instead of informing the intended known

recipients Hatch and Dewar that they had the refunds, they turned those

refunds over to Beddall's son-in-law.

3

As will be shown, the CP As' arguments with regard to violations

of federal law to the effect that had they disclosed this information they

would have engaged in an illegality is likewise pretextual. These CPAs'

violations of the CPA's written standard of care is beyond dispute. This

Court reviews the Snohomish County Superior Court's two grants of

partial summary judgment de novo. Those grants of partial summary

judgment are supported by Smith's own sworn testimony, his admitted

actions and inactions, the undisputed facts below, Washington and federal

law regarding CP As' mandatory standard of care, and the Washington

jurisprudence of negligent misrepresentation. Contrary to Petitioners'

assertions, Trask v. Butler, 123 Wn.2d 835,872 P.2d 1080 (1994), while

not solely relied upon by the trial court, further supports the grants of partial

summary judgment.

This Court should deny the Petitioners' request to overturn Judge

Downes' two grants of appropriate partial summary judgment and remand

the matter to the Snohomish County Superior Court for trial.

II. COUNTER STATEMENT OF THE CASE

Beddall was in debt to Dewar in an amount in excess of

$3,900,000.00. (CP 1071). Beddall did not have the means to satisfy this

debt and Beddall and Dewar, each through their respective counsel,

engaged in negotiations. (CP 1062-1063). Those negotiations resulted in

4

what ultimately became the Property Settlement Agreement between

Beddall and Dewar. (CP 1069-1093). (See App. A). That Agreement

provided in relevant part as follows (See App. A, p.3 ~4, CP 1071):

Beddall ... further agree[s] to ... use the firm of Traner Smith of Edmonds, Washington ... for the following: (ii) timely file (without extensions) a federal tax return for tax year 2009, to seek a refund in an amount no less than One Million Dollars ($1,000,000) in the aggregate, subject to the review, evaluation, and approval thereof by the Lender [Dewar] in the Lender's sole and absolute discretion .. .irrevocably execute and/or cause to be executed and delivered to Lender simultaneously with the execution ofthis Agreement, IRS Forms 2848 (Rev. June 2008) and the Power of attorney .... Hatch agrees to sign (on behalf of Beddall and BPI) and cause to be filed, no later than three (3) days following Lender's approval, the Tax Return and to email confirmation hereof along with a copy of the Tax Return to Lender's counsel at wong@lasher.com. Borrower, Beddall, and BPI hereby irrevocably and permanently assign to Lender, as the sole beneficiary, all right, title, and interest in the Tax Refund. Borrower, Beddall, and BPI [Beddall's corporation] hereby irrevocably authorize Jonathan C. Hatch, Attorney at Law (hereinafter "Hatch") as their representative to endorse and convert to good and available funds, in favor of Lender, each and every Tax Refund and to immediately disburse same to Lender upon the receipt thereof by Hatch. Hatch hereby agrees to punctually deliver to Lender in good and available funds, in the form designated by Lender. .. each Tax Refund received by Hatch. [Emphasis added.]

Dewar, pursuant to the Property Settlement Agreement, obtained a

default Judgment against Beddall in April 2010 in the amount of

5

$4,109,115.48. (CP 997-1004, 1062 ~5). Smith was aware of that

Judgment. (CP 950, 964, 992).

As part of this transaction, Jonathan Hatch (Beddall's attorney),

sought income tax advice from Smith. (CP 1022-1025). Smith advised

Hatch directly that the contemplated transaction was appropriate from a

tax standpoint. (CP 1022-1025). This satisfied Hatch to the extent that he

"green lighted" the transaction to go forward with the tax return being

prepared by the Petitioner CP As. (CP 1022-1025).

Hatch relied on the tax advice from the Petitioner professional

CP As. (CP 1022-1025). Smith further advised Hatch that it was

appropriate that the deed be effective December 31, 2009 even though it

was not executed until 2010. (CP 1022-1025).

Smith acknowledges that he was fully aware that the objective of

the undertaking, pursuant to the Property Settlement Agreement, was to

place a minimum of one million dollars or more in tax refunds into the

hands of Respondent Dewar - Smith's client's judgment creditor. (CP

952, 956-963, 972-973, 982-983, 1042). Smith also acknowledges that he

had a copy of the Agreement available to him during his preparation of

Beddall's 2009 tax returns and before the tax returns were finalized. (CP

951,974-976,982-983,1017).

6

As part of the undertaking, Smith also had a copy of the special

powers of attorney (See App. A, CP 1086, 1089) irrevocably given by

Beddall to Jonathan Hatch. (CP 952, 970-973, 975-976). This, together

with IRS Form 2848 Power of Attorney (See App. A, (CP 1090-1093),

allowed Beddall's attorney Jonathan Hatch to sign the tax return on behalf

of Beddall and to receive the anticipated IRS refunds and negotiate them

for the benefit of Dewar. (CP 970-976).

Smith acknowledges, confirmed by Hatch, that Smith gave advice

to Hatch that the transaction would pass IRS muster and was legal. (CP

1022-1025). Smith acknowledges that he had Hatch come to his office on

April 15th on two occasions and review and sign the Beddall 2009 tax

returns. (CP 1017-1018, 1021, 1032).

The first time Hatch came to Smith's office on April 15,2010 was

to sign the return, which had Beddall' s address on it. (CP 1032). Smith

also acknowledges that he sent on April 15, 2010 Beddall' s proposed tax

return electronically to Dewar for Dewar's inspection and approval. (CP

823-825, 1020). This was required by the Property Settlement Agreement.

(See App. A, p.3 ~4, CP 1071).

Dewar responded to Smith on April 15,2010 pointing out three

errors (See App. B, CP 823-825):

7

... [Dewar] I have the following initial comments: 1. Brad's address for his 1040 and his 1045 should be care of Jonathan Hatch. Since Shirley is not party to the settlement agreement, she is not bound to give the refund check(s) to Jon. [Smith] We changed the address to Jon Hatch's address. [Dewar] 2. I see that Brad answered on schedule B that he has no foreign bank accounts. I don't believe that answer is correct based on what he has told me ... 3. I see nothing that shows the sale of his apartment house at 588 Elm .... [Dewar] The only change I insist on is the address change. [Emphasis added.]

Smith acknowledges that as a result of the foregoing Dewar e-mail

and Smith's responses that the address in fact was changed from Beddall's

address to Hatch's address. (CP 1007-1008, 1020-1021, 1032). Hatch

came back to Smith's office for the second time on April 15,2010 to sign

the final return - which had Hatch's address and which was filed by

Smith. (CP 1021, 1032).

Thereafter, Beddall contacted Smith in an attempt to ascertain the

status of the returns and when the refunds would be received. (CP 1029,

1033). Smith, in response to Beddall's contact, placed a conference call

between himself and Beddall and the IRS practitioner hotline. (CP 1029,

1033). With Smith on the line, Beddall had the IRS change the address to

where the refund was to be sent from Beddall's attorney Hatch's address

to that of the CPAs. (CP 1029, 1033). Smith remained silent about this

change. (CP 1041, 1052, 1054-1055).

8

In response to Dewar's later inquiry about the status of the refunds

and a request for a copy of Beddall's returns (CP 828), Smith forwarded to

Dewar on June 7, 2010, after the conference call with the IRS practitioner

hotline, and after an amended return had been prepared (CP 253-254,

1030, 1039), a copy of the original filed tax return with the address of

Jonathan Hatch - even though Petitioner Smith knew that the address had

been changed from that of Jonathan Hatch to his own address. (See App.

C, CP 831, 834-932). He did not, in transmitting this tax return to Dewar,

tell either Dewar or Hatch that the address had been changed or that an

amended return had been prepared. (CP 253-254,831, 1030, 1039, 1065-

1066).

The IRS accepted the tax returns filed April 15, 2010 and sent four

refund checks totaling $1,206,703.32 to the offices of the Petitioner

professionals on July 9, 2010. (CP 23-26). Upon receipt, Smith did not

call Hatch - he did not call Dewar - rather, he called Beddall. (CP 60-61,

1058-1059). Beddall instructed Smith to contact Beddall's son-in-law and,

contrary to the Property Settlement Agreement between Beddall and

Dewar, give the four refund checks to Beddall's son-in-law. (CP 1059).

Petitioner Smith did so. (CP 1059).

9

Smith was silent as to both Hatch and Dewar concerning Smith

turning over the four refund checks to Beddall's son-in-law as opposed to

the contractual recipient Hatch. (CP 1041, 1052, 1054-1055).

Beddall, on receiving the funds, wrote a letter to Dewar attempting

to renegotiate Beddall's debt. (CP 935). Beddall also called Jonathan

Hatch. (CP 1048). Hatch, in astonishment upon learning of these events,

called Smith the next day. (CP 1048).

Upon Hatch calling Smith, Smith "resigned" the engagement. (CP

1044-1045). Smith also testified in his deposition that there was another

reason for the resignation of the engagement with Beddall, "Q. Other than

lack of payment of the $800, was there any other reason for the

termination of services? A. [Smith] Yes. Q. What was that? A. [Smith]

Because we felt he [Beddall] didn't follow through on his contract he

had with Mr. Dewar." [Emphasis added.] (CP 955, p.46, Ins.15-20).

The statute of limitations for the IRS to challenge the refunds is

generally three years from the date of filing the last amendment. 26 U.S.c.

§6501(a). (See App. D). Smith filed an amended return in July of2010

reflecting Beddall's foreign bank accounts in Thailand. (CP 34, 254,1031,

1039). The statute of limitations for the IRS to challenge the returns and

refunds expired sometime in July of2013. 26 U.S .C. §6501. (See App. E).

There is no evidence of any sort in the record before this Court that the

10

IRS has in any way challenged these significant refunds arising from the

2009 returns.

III. SUMMARY OF ARGUMENT

The Petitioner CP As had a conflict of interest in their undertaking

to allow the address to be changed; to amend the returns; and to have

themselves receive the refund checks. Federal law - contrary to the

argument of Petitioners - allows the contractual purpose of the Property

Settlement Agreement, and further allows Beddall' s attorney Hatch to

hold an irrevocable power of attorney to negotiate the refund checks for

the benefit of Dewar. The Petitioners' silence upon Beddall's changing the

address was not mandated by federal law. In fact, federal law precludes

CP As from even undertaking an engagement if they have a conflict of

interest unless they disclose the conflict and obtain written consent from

all parties involved. 31 C.F.R. § 1 0.29. (See App. F). In addition, CPA

professional standards, which are incorporated by reference into state law,

also do not allow a CPA with a conflict of interest to represent a client

unless the CPA discloses the conflict and obtains consent from the

affected parties. AICP A ET Section 102-2. (See App. G).

Additionally, the Petitioners, by their own testimony and actions,

affirmatively negligently misrepresented to Respondent Dewar by

commission (June 7, 2010 transmission of tax return, which Petitioners

11

knew had been amended and had a misleading address), and by omission

by failing to tell Hatch and Dewar of the call to the Internal Revenue

Service changing the address. Lastly, they further negligently

misrepresented by omission in failing to inform both Hatch and Dewar

that Smith was transmitting the refunds to Beddall ' s son-in-law when he

knew that they were to go to Hatch and ultimately to Dewar.

The Petitioners' silence is condemned in Washington's adoption

of the tort of negligent misrepresentation. This is to be found in §551 and

§552 of the Restatement (Second) of Torts, ESCA Corp. v. KPMG Peat

Marwick, 135 Wn.2d 820, 829-32, 959 P.2d 651 (1998), and the recent

decision of our Supreme Court in Donatelli v. D.R. Strong Consulting

Engineers, Inc., 2013 WL 6022171 (November 14,2013), pp. 12-16.

Moreover, even if the IRS had later successfully challenged the

returns or refunds after Hatch delivered the refund proceeds to Dewar in

fulfillment of Beddall' s obligation to Dewar - such IRS challenge would

have been against Beddall- not Dewar. Accordingly, even if the CPAs'

argument of their own filing an incorrect return were later proven by the

IRS, had the CP As performed to the standard of care required, Dewar

would still have obtained the benefit of his bargain, i.e. the fungible funds

to which he was entitled.

12

Pursuant to RAP 10.3(6), the standard of review on each of these

issues is de novo as this matter arises from two grants of partial summary

judgment by the trial court on November 8, 2012 and March 20,2013.

Roger Crane & Associates, Inc. v. Felice, 74 Wash.App. 769, 875 P.2d

705 (1994).

IV. ARGUMENT

A. Petitioners Misstate The Law Relative To The Tax Returns In Question

Petitioners argue to this Court (BA 23-26) that what they did was

required and they give short shrift to the undeniable irrevocable powers of

attorney and the concomitant IRS Form 2848 that Hatch held on behalf of

his client Beddall.

Contrary to the Petitioners' argument, what transpired vis-a-vis the

irrevocable power of attorney and IRS Form 2848 relative to Dewar,

Beddall, and Hatch is totally supportable as a matter of law. 31 C.F.R.

§240.17 - Powers of Attorney provides in (a), (b), and (d) (See App. H)

that Beddall's actions in giving to Hatch the power to sign on his behalf

and receive the funds is totally permissible pursuant to federal law.

13

Moreover, federal law specifically allows the delivery of the

checks and the signing of the checks to be done as was intended by Hatch.

This is addressed in 26 C.F.R. §601.506. 1 (See App. I).

The Petitioners argue at length that the refund could not be

assigned to Dewar. (BA 39-43, 45-47). They, however, failed to speak

specifically to the terms of the Property Settlement Agreement, its legal

purpose, and the special power of attorney irrevocably given by Beddall to

his attorney and attorney in fact - Hatch. (See App. C) (CP 1089).

Indeed, the facts of the case at bar are that not only did Beddall

willingly, with advice of counsel, enter into such agreement with Dewar,

but Beddall and his attorney Hatch were contractually obligated to achieve

the result as addressed in paragraph 4 of Property Settlement Agreement.

Smith said he had paragraph 4 and the entire Property Settlement

Agreement in his possession, along with the irrevocable power of attorney

(See App. A, CP 1089), and IRS Form 2848 (See App. A, CP1090-1093).

(CP 951, 974). Furthermore, Smith had previously, upon request of advice

from Hatch, provided assurance to Hatch that the entire transaction was

appropriate. (CP 1022-1025).

I "Notices to be given to recognized representative; direct contact with taxpayer; delivery of a check drawn on the United States Treasury to recognized representative." 26 C.F.R. §60 1.506. (See App. I).

14

Even assuming arguendo that Smith did not read the Property

Settlement Agreement, the standard of care coupled with common sense in

this unique circumstance required that he read it in order to competently

prepare Beddall's returns. (See Declaration of John Clees, dated October

21,2012, pp. 13-14, §VI, ~2). (CP 1106-1107).

B. The Petitioners - Professional CP As - Failed As A Matter Of Law To Comply With The Written Standards Of Care Of Certified Public Accountants

RCW 18.04.055 Board - Rules (2) provides that the Board of

Accountancy:

. .. shall prescribe rules consistent with this chapter as necessary to implement this chapter. Included may be: . .. (2) Rules of professional conduct for all licensees . .. in order to establish and maintain high standards of competence and ethics including rules dealing with independence, integrity, objectivity, and freedom from conflicts of interest; ....

Pursuant to that delegation of legislative authority, the Board of

Accountancy has adopted WAC 4-30. The Board, pursuant to WAC 4-30-

020, is authorized, " ... to promulgate rules to carry out the purpose of the

act, which include: Protecting the public interest; . .. Ethics and prohibited

practices; . .. ". The Board goes on to require in WAC 4-30-048 that CPAs:

.. . must comply with rules, regulations, and professional standards promulgated by the appropriate bodies for each service undertaken .... Authoritative bodies include, but are not limited to, .. . the Internal Revenue Service (IRS); the American Institute of Certified Public Accountants (AICPA), .... Such standards include: . . . (8) Statements on

15

Standards for Tax Services and Interpretation of Statement on Standards for Tax Services issued by the AICPA; ... (11) Professional Code of Conduct issued by the AICP A including interpretations and ethics rulings; ... (16) IRS Circular 230; ....

WAC 4-30-040 requires of all certified public accountants integrity

and objectivity. The WAC goes on to say that:

When offering or performing services, .. .licensees, ... must: Remain honest and objective; Not misrepresent facts; Not subordinate their judgment to others; and Remain free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards listed in WAC 4-30-048. [Emphasis added.]

AICPA standards which define CPAs' responsibilities when they

prepare financial statements (AR Section 80.47 through 80.52 (See App.

J)) provide guidance as to what accountants should do when they become

aware of subsequent facts after their work product has been provided to a

third party. In brief, this standard requires CPAs to inform third parties

directly of changes to financial statements. This particularly is true if the

client refuses to disclose the changes to third parties, as occurred in the

case at bar.

While the foregoing AICP A standards references financial

statements, the reasoning and logic to such a standard is equally applicable

to this case. It is equally applicable as Smith knew that both Hatch and

Dewar were relying on the tax returns that he prepared and transmitted to

16

Dewar and Hatch. When he knew that the tax returns had been changed to

significantly modify the objective ofthe funds going not to Hatch but to

his office he had an affirmative duty to speak. Concepts of

professionalism, integrity, and honesty mandated that he inform Hatch and

Dewar of that.

This is further borne out by the existence of WAC 4-30-042

requiring of CP As, as it relates to financial statements that they:

. .. must evaluate and maintain their independence so that opinions, reports, conclusions, and judgments will be impartial and viewed as impartial by parties expected to rely on any report expressing assurance by such persons. Such persons are required: (1) To comply with all applicable independence rules, regulations, and the AICPA code of conduct .... [Emphasis added.]

In the case at bar, the Petitioners knew that both Hatch and Dewar

were, in the words of the above WAC, relying upon them to achieve the

stated, express, intended, contractual objective, i.e. to place a refund in the

hands of Respondent Dewar in excess of one million dollars. Petitioners

had the contract; and knew its contractual objective. They were well aware

of Dewar's contractual right emanating from paragraph 4 to review the

proposed return and his absolute right to approve it before filing. Dewar

did so, insisting upon, inter alia, the mandatory change of the address

from that of Beddall to Jonathan Hatch. (CP 823-825, App. B).

17

C. Client Confidential Relationship Which Petitioners Rely And Use Defensively Is Belied By Their Actions And What In Fact Took Place

There is no CPA-client privilege in any way akin to the attorney-

client privilege. Rather, there is a confidential relationship. The rubric of

the confidential relationship between Beddall and Smith is belied by what

Smith in fact did. Smith shared information; gave opinions; received

information from Jonathan Hatch and Dewar; had Jonathan Hatch sign the

tax return; transmitted the tax return to Dewar for prior approval and

correction; made the changes requested by Dewar; and ultimately on June

7, 2010 forwarded a copy of the tax return to Dewar - even though he

knew the return had been amended and the address had been changed. The

reality of the matter is that the confidential relationship, which Smith tries

to use offensively, did not exist as information was freely shared with

Hatch and Dewar - including the tax return itself.

In essence, what the Petitioners are arguing to this Court is that they

can waive the confidential relationship when they so desire and as

contemplated by the contract and the actions of the parties, but they will

wrap themselves around the flag of the confidential relationship - and use it

as a sword in their defense of what they in fact did. They cannot and should

not have it both ways.

18

D. Blaming The Return On Dewar

The Petitioners argue that the return was faulty allegedly based on

information incorrectly provided by Dewar and his former firm. (BA 39-

43,45-46.) That, of course, is a circuitous argument of the first order, and

is not borne out by the standard of care.

Treasury Department Circular No. 230 § 1 0.222 (See App. K)

Diligence as to accuracy - Reliance on others states in (b) as follows:

Except as provided in §§ 10.34, 10.35 and 10.37, a practitioner will be presumed to have exercised due diligence for purposes of this section if the practitioner relies on the work product of another person and the practitioner used reasonable care in engaging, supervising, training, and evaluating the person, taking proper account of the nature of the relationship between the practitioner and the person.

Petitioners clearly did not engage, supervise and train

Dewar (who retired as a CPA and employee of Dewar Meeks +

Ekrem in 2006 (CP 1061)). Moreover, it would have been totally

inappropriate if they had engaged Dewar since attorney Hatch and

Beddall wanted an opinion independent of Dewar.

Treasury Department Circular No. 230 § 1 0.34 (See App. L)

Standards with respect to tax returns and documents, affidavits, and other

2 Also cited as Title 31 Code of Federal Regulations Subtitle A Part 10, published September 26,2007.

19

papers states as it relates to information furnished by clients - and

applicable to documents furnished by others - as follows::

. .. .The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete. [Emphasis added.]

Not only do the Petitioners ignore this, but they also ignore an

equally as salient and important point. Their argument is that Seddall was

not entitled to the refund in the first instant. In essence, that astonishing

argument is that the CP As were in essence negligent and filed the return

that should have not resulted in the refund of$I,206,703 .32. (SA 35-43,

45-47). In other words, they are saying that they themselves were

negligent in the preparation of this return even though they signed the

returns as preparers stating (CP 315):

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true correct and complete. Declaration of preparer (other than taxpayer) is based on all information of which prepared has any knowledge.

The CPAs' argument is not supported by the facts before this Honorable

Court. First and foremost is the fact that the Petitioners themselves signed

the tax returns. Secondly, the IRS paid $1,206,703.32 based on the returns

filed and accepted by the IRS.

20

Lastly, this affirmative defense of the Petitioners, in essence

claiming that they filed a faulty return, is contrary to the absence of any

fact that the Internal Revenue Service has challenged the returns that were

filed. The Internal Revenue Service generally has three years from the date

of filing the amended return in July 2010 to bring an action to challenge

the refunds. 26 U.S.C. §6501 - Limitations on Assessment and

Collection. (See App. E). The party whom the IRS would have had to

challenge within that three-year period is Beddall and his corporation. The

IRS would have no right of any sort to challenge Dewar had the

contractual intent of the parties, Dewar and Beddall, been carried forward.

Indeed, Dewar would have received that which he bargained for and

Beddall agreed to give. The risk of a challenge to the returns or refunds

would be solely and exclusively between the IRS and Beddall. Moreover,

there is not one scintilla of evidence in this record before this Court, nor

before the Snohomish County Superior Court, that the IRS has ever

challenged either return. For all the foregoing reasons, these pretextual

arguments should also fail.

E. Based Upon CPAs' Own Actions And Inactions, The Trial Court Correctly Concluded That They Had Engaged In Negligent Misrepresentations To Hatch And Dewar

21

Washington has adopted §551 and §552 of the Restatement

(Second) of Torts holding a party liable for negligent misrepresentation.

Its applicability to certified public accountants has also been addressed in

ESCA Corp, supra.

Recently, Washington Pattern Jury Instructions were promulgated

as it relates to negligent misrepresentation. WPI 165.01 Negligent

Misrepresentation - Affirmative Misstatement - Burden of Proof on the

Issues and WPI 165.02 Negligent Misrepresentation - Failure to Disclose

Information - Burden of Proof on the Issues. These WPI's are most

instructive and helpful to the issues in this matter.

Undisputed evidence before the trial court and before this Court

shows that Dewar has shown by clear, cogent, and convincing evidence

that each element of negligent misrepresentation by the CP As has been

met. It has been met in the CPAs' affirmatively sending the tax return on

June 7, 2010 when Petitioners knew that the return had been amended and

the address on the return was incorrect and misleading. It likewise has

been shown, by clear, cogent, and convincing evidence, that the

Petitioners failed to disclose to either Hatch or Dewar the change of

address, the receipt of the refunds by Petitioners, and the Petitioners

knowingly and volitionally turning over those refunds to Beddall's son-in­

law as opposed to the ultimate intended contractual recipient Dewar via

22

Hatch. Petitioners argue to this Court that they had no contractual privity

with Dewar. This is true in a strict contractual sense, but ignores the facts

of the case and the duty that the law places upon them.

In Donatelli, supra., our Supreme Court has instructed us that

under the Independent Duty Doctrine a duty can arise to a nonparty to a

contract (Petitioner CP As), " ... because the duty to avoid

misrepresentations that induce a party to enter into a contract arises

independently of the contract." Donatelli, p. 12. " ... D.R. Strong's duty to

avoid misrepresentations arises independent of contract." Donatelli, p. 15.

An analysis ofWPI 165.01 shows the negligent misrepresentation

by affirmation done by the Petitioners. Petitioners supplied information for

the guidance of others in their business transaction that was false; (June 7,

2010 transmittal of non-amended tax return with misleading address)

Petitioners knew or should have known that the information supplied

would guide Dewar in the transaction.

The Petitioners were not only negligent in communicating this

false information, it is obvious that Dewar, in seeking the tax return, relied

on it and that his reliance on the integrity of these professional CP As was

reasonable and that the transmittal of the false tax return ultimately caused

damage to Dewar.

23

Likewise, when one squares the requirements stated in WPI 165.02

against the CP As failure to disclose, the result is also clear. The Petitioners

had a duty to disclose the change of address, the receipt of the funds, and

the transmittal of the funds to Beddall's son-in-law. The Petitioners

acknowledge that they did not disclose any of this to either Hatch or

Dewar. Thus, they were negligent pursuant to the standards to which they

are held by RCW 18.04.055(2) as well as Washington doctrines of

negligent misrepresentation. Had the disclosure been made, it would have

caused Hatch and Dewar to act differently. Likewise, Dewar has lost the

refund in a precise, known, and undisputed amount by the Petitioners

failure to disclose. (CP 15-18).

F. The Applicability Of Trask v. Butler, 123 Wn.2d 835, 872 P .2d 1080 (1994)

As addressed by Mr. Clees, the very uniqueness of this significant

transaction and undertaking coupled with the Petitioners' knowledge of

the intent of the parties creates liability as the trial court found for both

their affirmative and silent negligent misrepresentations. Trask, supra,

involved other professionals - lawyers. However, Trask dovetails with the

outcome concluded as a matter of law by the trial court. There is no logical

reason why the Supreme Court's holding in Trask should apply to lawyers

but not to fellow professionals such as certified public accountants.

24

Moreover, the modified multifactor balancing test enunciated in

Trask, when squared against this case, is an adjunct supporting the result

reached by the trial court as a matter of law. Trask, supra, pp.842-843.

Those factors are as follows:

1. The whole purpose of the transaction was intended to benefit

Dewar.

2. The foreseeability of harm to Dewar is demonstrated by the

change of address and the CPAs' knowing affirmative actions in the turning

over of the funds to Beddall's son-in-law as opposed to the intended

recipient Hatch and ultimately Dewar.

3. The Court concluded as a matter oflaw, in light of the undisputed

evidence, as to the amount of Dewar's damage, which has not been disputed

by the CPAs.

4. There is closeness between the CPAs' conduct and the injury.

5. The policy of preventing future harm in upholding the trial

court's decision is complementary and harmonious with the law regarding

the standard of care of professional CP As based on the facts of this case.

6. There can be no additional burden on the CPA profession as what

the defendantslPetitioners were required to do as it is consistent and required

25

by the standard of care - and what they in fact did do and failed to do is

contrary to the standard of care. 3

Moreover, the trial court's second grant of partial summary judgment

(CP 15-18) correctly concluded that, "The Court concludes as a matter of

law that there are no genuine issues of material fact as it relates to Plaintiffs

damages arising from Defendants' negligent misrepresentation as earlier

found by this Court." (CP 17).

V. CONCLUSION

The Petitioners seeking relief from this Court are professionals. By

their very nature, they owe duties to the public. Those duties are enunciated

by written standards required by law even as equally clear as the RPC's are

law for lawyers. Eriks v. Denver, 118 Wn.2d 451, 457, 824 P.2d 1207

(1992).

The Petitioners chose, knowingly, to violate their standards of

integrity; instead of avoiding conflicts of interest they engaged in conflicts of

interest; instead of avoiding deception and misrepresentation they engaged in

deception and misrepresentation. When Beddall and Smith were on the IRS

practitioner hotline and Smith heard Beddall change the address, that

instantly raised a conflict of interest for Smith.

3 Petitioners' Tegman v. Ace. & Med. Investigations Inc., 140 Wn.2d 102, 75 P.3d 497 (2003) argument is inappropriate as the trial court has not even considered that argument and it remains for further summary judgment proceedings or trial.

26

AICPA standards (AICPA Rule 102 and Interpretation 102-2 (See

App. M)) required Smith to get written permission from Dewar and Hatch

before proceeding with this new expanded engagement. Moreover, when

Smith affirmatively on June 7, 2010 sent Dewar a tax return, which was filed

with Hatch's address on April 15, 2010, but Smith knew that the return had

been amended and the address had been changed is an affirmative negligent

misrepresentation. Likewise, it is not and cannot be disputed that the

Petitioners remained silent to Hatch and Dewar when the refunds were

received on July 9, 2010 and they, contrary to the known objective of the

parties, instead of seeing that Hatch received that $1,206,703.32, turned it

over to Beddall's agent, his son-in-law.

There are no genuine issues of material fact. The trial court was

legally correct in concluding that there were negligent misrepresentations

and the amount involved in those negligent misrepresentations is not in

dispute.

This Court should uphold the trial court's grants of its two partial

summary judgment orders. This Court should deny Petitioners' appeal;

return the matter to the Snohomish County Superior Court; and allow the

matter to proceed to trial or summary judgment on the Petitioners'

remaining issue of Tegman, supra.

27

DATED this -tl day of December, 2013

Respectfully Submitted,

By:

Attorney for Respondent

28

DECLARATION OF SERVICE

On December 18,2013, I caused to be delivered via legal

messenger a true and accurate copy of the attached document, to the

following:

SAM B. FRANKLIN TIMOTHY D. SHEA Lee Smart, P.S. 1800 One Convention Place 701 Pike Street Seattle, W A 98101 Counsel for Defendants/Petitioners

The original of this document was also sent via legal messenger to

be filed in the Court of Appeals.

I declare under penalty of perjury under the laws of the State of

Washington that the foregoing is true and correct. r /.~'

~6nc{JOJ{~ ',,-,iLOna M. Phelan, Par Ieia1

LAW OFFICE OF ROBERT B. GOULD

29

Index To Appendices

Appendix A: Property Settlement Agreement, effective dated 12/29/09

Appendix B: E-mail trail between Smith and Dewar, beginning at 10: 17am on 411511 0 and ending at 2:54pm on 411511 0

Appendix C: E-mail from Smith to Dewar of 4:32pm on 6/711 0 with attached copy of the original filed tax return

Appendix D: 26 U.S.C. §6501(a)

Appendix E: 26 U.S.C. §6501

Appendix F: 31 C.F.R. § 1 0.29

Appendix G: AI CPA ET Section 102-2

Appendix H: 31 C.F.R. §240.17

Appendix I: 26 C.F.R. §601.506

Appendix J: AICPA AR Section 80.47 through 80.52

Appendix K: Treasury Department Circular No. 230 §10.22

Appendix L: Treasury Department Circular No. 230 § 1 0.34

Appendix M: AICP A Rule 102 and Interpretation 102-2

A-I

. ' ..

PROPERTY SETTLEMENT AGREEMENT

This PROPERTY SETTLEMENT AGREEMENT (the "Agreement") is entered into effective thls 29'" day orDe«mbcr. 2009, by and between DOUGLAS M. DEWAR ("Lender"), LEA LLC, a W6$l)in&"on limited liability company (~BorTower·), BRADLEY E. BEDDALL, an unmarried person (nSc:ddall"), and BEDDAlL PROPERTIES INC., a Wllshington corporation ("BPI") (Lender, Borrower, Beddall, and BPI may each be referred to as It 'party" and collectively as the ,·parties").

RECITALS

A. On or about December 6, 2006, BOrJowcr executed II Promissory Note in favor of Lender in tbe initial principal amount ofS2,OSO,OOO (the "Promissory Note").

B. Borrower also exceuted B Credit Agreement dated December 6, 2006 in favor of Lender for a loan in the initial amount of 52,050,000 (the "Credit Agreement"). The Credit Agreement is personally gu.mmteed by Brad Becldnll (aka ~11Idley E. Beddell) (the "Guarantee").

C. To secure payment and performan~e under the Promissory Note and Credit Agreement, Borrower exec\lted II Deed of Trust dattd Decemb~ 6, 2006 (the "Deed ot TNst"), in favor of Lender lIS beneficiary, ",iljch Deed of TNSI was n:corded with the Auditor of King County, Washington under Recording No. 20061207001057 and has not been subsequently amended.

D. The Deed of TNst encumbers portions of the property commonly known as Lea Hill, I condominium (formerly known as Carriage Square) (the ·CondDminium~) created pUlSUIUlI to an Amended and Restaled Condominium Declaration recorded under King County Recording No. 20070503001134 (the "Declaration") and the Survey Map and Plans for Phases I, II, and 111 rec::orded in Voh:me 68 of Condominiwns, Pegts 6Q·gg, as amended by Amendment thereto .recorded unda King County Recording No. 20070503001133. That portion of the Condominium encumbered by the Deed of Trust, as partially reconveyed from lime to lime, shall be collectively referred to herein lIS the ~PropeJ1y".

E. To further sccure payment and performance under the Promissory Note and Credit Agreement, Beddall PropertieJ JIlC., a Washington corporation, executed II Collaterar A"ignment of· Member.>hip Interest for Security dated December 6, 2006 (lhe "Pledge Agreement") whereby one·hundred percent (100%) of the membmhlp interests in the Borrower we1t\ pledged to Lender.

F. The Note, Credit Agm:meot, Deed of Trust, Pledge Agreement, and the other relaI~ loan docwnents arc collectively refened to herein as the "Lollll Documents". .

(BALANCE OF PAGIlI'Nl"ENTIONAL.L. Y lEfT BLANKI

t 190')\s~191.S< DOC)

App. A-I

1069

i '

, .'

O. Borrower and Beddall have defaulted in their perforrnllnee of the terms of the Loan t><x:wnents, arc unable to cure those defaults, and wish to convey the Property to Lender. Lender has agreed to accept such ronveyance of the Property, subject to all of the provisions of Ihe Agreemenl below.

NOW, THERE~ORE, in consideration of the foregoing Recitals (whieh are hereby incorporated into and made Pari of the Agreement by llUs reference), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows.

AGREEMENT

I. Agreement to Convey to Lender. Borrower hc:rcby a&recs to solidy all or the Conditions P=dent and to convey to Lender absolutely anel free of any right of miemption and lUIY olber riebt or interest of Borrower, Beddal!, BPI, or anyone clciming through or under them, III! of Borrower's right, title and interest in tho Property. This c.onveyance is to be an IIbsolute ronvc:yanc:e of titfe in effect as well as in (Offil, and is not intended lIS a mongage, tnl$1 conveyance, or sccurity of any kind. Excepl 10 the extent provided in Pamgraph ti(a) hereof, Borrower shall have no further interest or claim in and to the Property or to the proceeds 8IId profil.S which may be derived from the Property of ally kind whctsoever.

2. Conve.yanee of Tjtle by Quit Clro peed. The Property shall be conveyed by Borrower 10 Lender, or any assignee of Lender, by a Non.Mergcr Quit Claim Deed, to be executed by BOrrowCl and delivered 10 Lender at the same time as this Agreement or at any time thereafter at the request oC Lender, in the (Offil anached hen:lo as Exhibit b A- and lIlade B part hereof(the "QCD"). The QCD shall transfer good and marbtable litle 10 the Property 10 Lender. IIJld the Deed of TIUSt shall not merge mlo the QeD. Al the request of Lender and \Ullil such time as the QeD is recoJded or the Deed of Trust is foreclosed. whichever is earlier, Borrower agn:cs to execute a S18rutory wamuny deed for any oflhe units in \he Property IIIId to cooperate in tbe sale and rental of the units, which cooperalion sball include without Iimitaticm. punerually responding to ond cxcculing docwnentation in coaneclion wilh CIIch such transaction. In no eyent whalSOever shall Borrower, Beddall. or BPI be entitled tD any portion of the proeeeds of MY such transaction.

3. l&nde(s Right ofFoieelosure. Lender reserves all rlghl.S to foreclosc the Deed of Trust and to exercise all olher rights and remedies of Lender under the Deed of TN$!, Pledge Agreaoent, and Loan Docurncnl.S. NotwithsllI1\ding lIJlylhiDg 10 the conlrary and in the event Lender fo~c1oses thc Deed of Trust, Borrower. Bcddoll, and BPI ngree: (i) to not reinstate, contest, or interfere ...... ith the foreclosure; (ii) to not cause any reinstatement, conlesting of. or interference with the foreclosure; (iii) the minimum bid at the foreclosure SIIle is to be no less than $3,000,000 Rl!!1 any payments (principll.l or otherwise) on Ihe loan secured by the Cascade Bank DOT (the "Cascade Bank Loan") made on and aner the dale of this Agreement; (iv) to remain joinUy and severally liable to Lender for Bny deficiency ot the: (oreelosu~ based upon the difference between the outstanding balance under the Loan (in an lUIIount no less than as sel forth in Section 7.7 below) and the: successful bid lit the foreclosure ule (the "Ddiciency"}: (v) to not contest or challel1ge me pursuit or collection of the Deficiency; and (iv} to allow and

2

App. A-2

1070

.'

facilitate the immediate entry of II judgment against Beddall, in the fonn attached hereto as Exhibit "D" and made a part hereof, in the amounl ofS3,975,922.09.

4. Tal! Refund. Borrower, Beddall, and BPI further agree to: (i) engage and use thi: fillD of Traner Smith of Edmonds, Washington (hereinafter "Traner Smith") for the following; (jj). timely file (without e:dellSions) a federal ta-.: retwn for tax year 2009. to seek 8 refund in an amount no less than One Million Dollars (il,COO,OOO) in the aggregate, subject 10 the review, evalU3tion. and approval thereof by the: ~rnJer in the: u-nder's sale and absolute discretion (the foregoing amount or actual refund(s) recdved hereinafter referred to as the "Tax Refund"); (iii) tile no other tax rcru!l) for 2009 other th:m the one contemplated under Soetion 4{ii) above to be prepared and filed by Traner Smith to obl8.in a refund (or Lender (the "Tax Retwn"); and (iv) irrevcx:ably execute andfor cause to be executed and delivered to Lender simultaneously with the execution of this Agreement, IRS Fonns 2~S (Rev, June 2008) and the Power of Attorney. in the forms attached hereto as Exhibit "C' and made a part hereof, Hatch agrees to sign (on behalf of B~daJl OJIet BPI) and tause to be fiI~. no later than three (3) days follo'wing Lender's spproval, the Tax Return and to email eonfirmatioa thereof' along with a copy of the Tax Rerum to Lendel'S counsel at wong@lasher.com. Borrower, BcddaJl, ami BPI hCR:by incvocably and permanently assign to Lendc:r, 1.5 the sole beneficiary, all right, tille, and mItres( in the Tax Refund. Borrower, Beddall. and BPI hereby irrevocably authorize Jonathan C. Hatch, A1lorney lit Law (hcteina.fter "Hatch") as their representative to endorse and convc:n to good and available funds, in favor of Lender, each and· eve!,), tax Refund and 10 immediately dlsbll1$c same to Lender upon the receipt thereof by Hateh. Hatch hereby IIgrceS 10 puncrually deliver to Lender in good and available funds, in the fonn designated by Lender (i.e., wire transfer, cashiers' cbeck, ete.), each Tax Refund received by Hilton. Any Tax Refund received by Lender shall be applied to the Ddidcncy.

5. Assignment of Dcc!aranl'$ Rights, The Borrower, as Declarant under the Declaration, retains certain rights an" powers'with respect to tho Condomi.nium. In cormeetion with the foregoing, Borrower hereby ilTeVocably assigns to Lender (and any succeSSOr andlor assigns designated by Lender) the rights of Borrower und~r Article J I of the Declaration to assign, Ifansfcr, sell. lease, or rent all or II portion of property (i,e., Condominium) thea owned by Lender. Upon Lendefs requc:st, Borrower furthct agrees to irrevocably IISsign to Lender any and all rights of Borrower under the Dr:claration, but onl)'lo the extent of the rights specifically requested by Lender (colleetlvely. "Assigned Rights"). Borrower and Beddall hereby acknowledge that Lender bas lawfully been, and may continue to exercise its rights. as a member of Borrower and to execute cOCWlIen1.S on behalf of the Borrower pW'$uant to Section 6 of the Pledge Agreement Borrower and Beddall hereby appoint Lender as their attorney-in-faCI to elCeCUle any and 1111 documents 10 further the purposes o( this Agreement and to wign certain tights to Lender, which rights include without limitation various rights of Borrower as Declarant under the Declaration. In furtherance of the foregoing, Borrower, Beddall, and BPI respectively agn;e to exeoute and deliver [0 Lender, contemporaneously with !his Agreement, the following documents attach~d hereto as Exhibit "Sft and made a part hereof: (a) Assignment of Rights ny Declarant; (b) Consent by Manager of LEA LLC; (e) Special Power of Attorney; and (d) Re~olutiol1 o( BPI.

3

App. A-3

1071

.' .'

6. Assignment of Bents !tnd Receil(ab)cs and Other Assets, Unless specified otherwi~, the Borrower, Beddall, IIlId BPI hereby tlSsign aU right, tille, o.nd interest in Ihe following to Lender Il$ of the dale of this Agreemeot (collectively. "Assigned Assets &;

Receivables"):

a. All right, title. and interest of Borrower, Beddall. and BPI in the m:eivahln assoeiated with the Property or Condominium except the right to be reimbursed for ad\'anccs made to the initial working capillli fund with respect to unsold Units (as defined in the Declaration) pursuant to Section 15,7 of the Declamtionj

b. As of August I . 2009, all rents IIlId bank accounts associated with Ihe Condominium;

c. A:I1y and all refunds of pl0PCny taxes, assessments. bonds, and otherwise associated with the Property or Condominium; o.nd

d. AU other asselS of Borrower, Beddall, and BPI used in eOlUlection with the renovalion, development, or eonstroction of the Condominium. which asscts shall include without limitation uJl model furniture, fixtUtes. iumishings. appliances, tools, parts, hardware, sLlpplies. raw rnaterials-.and other personal property,

7. Representatioll! snd Warnnric5 of BorrQwer and Beddal!. Borrower, Bcddall. and BPI represent and warrant to Lender u tollows:

7.1 Since Ihe execution and recording of the Deed of Trust and eXCept for the conveyances provided for under this Agreement, neither Borrower, Bcddall, or BPI have conveyed, assigned, or transferred the Property or any interest !hercin to any other person or entity thai Lender has not received notice or. DOC has Borrower, Beddall. or BPI created or suffered any lien or encumbranees against the Property, except (or: (i) the senior Deed of Trusl dated November 28. 2006 in favor of Cascade Bank and recorded under King County Auditors File No. 20()6120690022S7 (the "Senior DOT"); and (ii} the Deed of Trust.

7.2 There are no unpaJd obligations owed by Borrower, Beddall. or BPI with respect to the Property. othel thaIJ (i) amountS due to Lender under the Loan Documents; (ii) amounlS due Cascade Bank under the Cascade Bank Loan; and (iii) customary and reasonable operational cxpcn.scs and dues associated VoIith lea Hill Owners As~oci8tion.

7.3 Borrower, Bcddall. and BPJ have had the opportUnity to consult ~\ith their attorneys \\1th regard to tbe provisions of this Agreement, and BOrTower. Beddall. and BPI are entering into this Agreement QJld executing and delivering the QeD voluntarily, in good feith. without duress or undue influenu from Lender. and BOlTower, Beddall. Bnd BPI have not perpetrated any fraud or made any misreprestnUltioJJ in order \0 effecl this conveyanu,

7.4 Borrower, Beddall. aJ1d BPI have the full power and aulhority to enter into this Agreement and to cany oul its obligations hereunder. The execution BIld delivery of Ihis Agrcemc:nt and the consummation of the tranSBcriol\$ contemplated hcreby do nOI violate. re~ult

! 196IT.s9196j4 DOC) 4

App. A-4

1072

.' !

in a breach of, or constitute a default under any judgment, order or de(n:~ 10 which Ille BolTOwer, Beddall. or BPI is sUbject The execution, delivery, and perforrnllDce of !his Agreement by the BOlTowet, BeddaU, arid BPI will not violate, "'~th or without the giving of notice and/or the pas~ge of time, any provision of law now applicable to Borrower. Beddall. or BPI. The transactions contemplated by this Agreement will nOI require me ButhDriuti~ consent, or approval of any third party.

7.S Except for the unfiled lawsuit against Borrower I\lld Deddall initiated by Lender and smoed on Bcddallon December 23. 2009 (the "Lawsuit"), pending litigation against Brad Bedda\l. personally, related to Hamplon Harbor Poinle Condominium ("Hampton Litigation"), and the EPA investigation regarding 8slx:stos {the "lnvc:stigntion"), Illere is (i) DO

litigation, proceeding, arbitration action or govemmenlal investigation pending or, o.s far as is known to the Borro\l\'er or Bcddnll, u..realencd against the Borrower, Beddall. or a.ny of their uselS ex.cept for the foreclosure of the Deed of Trust, (ii) no fllCl i~ known to Borrower, Seddall. or BPI that is expected to give rise to any such litigation, proceeding, or Investigation, tmd (iii) no decrel:. injunction, or order of any court or governmental department or "seney is outstanding agalnst the Borrower. Bcddall, or BPI.

7.6 Dorrower, Beddall, IIl\d BPI represent to the Lender that Borrower, Beddall, and BPr have not knowinSly used, genel1lted, ml\llufactured. produced, stored, ~Ieascd, dischlll'ged or disposed of on, under, above or about the Condominium (or off site of th~ Condominiwn !hal mi&ht affect the Condominium) or transported to or from the Condominium, any Hazardous Substance or bto~in&ly allowed any other person or entity to do so. Neither Borrower. 8eddall. or BPI have RIIY knowledge or observed any qutslionahle practice or conduct indicating tbat any Hazardous SubstlUlce h.as been used, generated, manufactured. produced, stored, released, discharged or disposed of on. under or above Condominium (or off silt: of the Condominium that might affect the Condominiwn) or transported to or from the Condominium by any entity, firm or penon, or from BDy soun:c: ~hatsoever. The It:nn "Hazardous Substllllce" includes without limitation: (8) those substances included within the definitions of ~ha.z.ardous subsl8lIcesft, ."hazardous materials", "toxic substan~s". "hazardous wastes" or "solid waste" in lUIy Environmenlal lAw; (b) petroleum producL$ and petroleum byproducts; (e) polycblorinille:d biphenyls; (d) chlorinatcd solvents; and (e) asbestos. The term "Environmental Law' illcludes any fedcl1ll, state. mUnicipal or local hsw, statute, ordinanee. regulation, order or rule pertaining to health. industrial hygiene, environmental conditions or bazardous substances.

7.7 Thc outstanding balance due umler the Loan DoclJments as of the effective date of this Agreement is $6,975,922.09, which includes accrued intCTest. loan fees (pW'Suant to Section 2.3 of lhe Credit Agreement), and protcctivc advances (i.e., payments purnmnt to Section 9.4 of the Credit Agrec:ment) by the Lender to preservc Lender'$ rights under the Loan Do~ents. Borrower and Beddall further acknowledge that any IIlId all amounts paid by Lender 10 Cascade Bank with respect to the Casea.de Ban.1t Lallll (whether made before. on, or afier the date of this Agreement) arc: deemed to be pro!ec:tive advances and properly added to the outstanding balance due under the Loan Documents. Borrower, Beddall, and BPI aec:epl and ngrec: to the payment of S266,282.80 in loan fees on the $2,067,726.28 in protective advanc.e$ made by Lender in 2009 with respect 10 the Loan and to the payment of $1,022,7';4.01 In loon fees with respect to the Cascade Bank Loan (based upon a loan bala.ncc of S7,94I,762.19). Said

II~I )\s9295J •. DOCI

App. A-5

1073

loan fus are BUthOriz.ed by Sections 2.3 and 2.4 oflbe Credit Agreement Dnd are included in the outstanding balnnce under the Loan Documenl$lis stated hereinabove.

1.8 All signarurts on the loan DoeurnenlS are genuine; the LOM Documents arc enforceable egainst Borrower, B~dall, and BPI respec1ively; me crealion and prioriI)' of all security inlere.sL'i renccled in the Loan DocumentS have been perfected; and none of the makers, borrowers, or guamntors under the Promissory Note, Lo8.Q Documents, or Credit Agreement have any counter claims, set-off riQhlS, or defenses to payment 10 Lender under the Loan Documents.

7.9 Except lIS otherwise provided under this AgJ'Cement, lhe indeJ'Mities by and obligations of Borrower and Bcddall under the Loan Documents, including without limitation those under Sections 9.1 and 9.2 of the Credit Agr~clltcnt, shall remain in full force and elrect and sUl"\'jve any foreclosure of lhe Propcny by Lender, dud-in-lieu of the PNpcny to Lender or otherwise, satisfaction of the Loan, and SDlisfaction of the Deficiency or judgme.n\ referenced in Section l oflhis Agreement.

8. Indemnification by Borrower. B~dall. and BPI. Borrower, Beddall, and SPl agree to indemnify and hold Lender hllmllcss from and against any losses, damage" cos~ or expenses, including reasonable 8t10rneys' fees incumd by Lender lIS 8 direc:1 or indirec1 mull of (i) the breach of any reprcscnllllion or warranty of Borrower, Reddall. and BPI contain~ in Section 7 above, or (iI) any breach of any cQvenanlS or agreements by Bort'ower, Beddall, or BPI under Ibis Agreement. If Lender shaH discover after the execution and delivery of the QCDby Dorrower that any of the representations or waitanties of Bort'ower contained in Section 7 above anellor in this Agreement are nol true and correet in all material respeclS, Lender mllY. in addition to nny other remedy availa.ble 10 Lender lit law or in equity, mnstatc the obligations of Borrower, Beddall, and BPI 10 Lender under the Loan Documen1~. and BOlTowe.r, Beddall. and BPI hereby clIpressly consent to such reinstatement under Ihe aforesaid cimlmstanc:es.

9. Release by Borrower, BeddoJl. and BPI. In consideration of the c;ovenants of Lender contained in this Agreement. Borrower, BeddAlI, and DPI hereby fully and unc;onditionally releBSc and di~hilIge Lender, and oJI of under's predecessors, successors. assigns, officers, directors, ernploye~ agents and attorncys (collectively the "Released Parties") from all liability of eny kind OlId nature, and eauses of action and any other right of action. knoWll or unknown, that Borrower, Beddall, or BPl presently has or may hove in th~ future against the Relca.scC Panies, relaled directly or indirectly to ony of the Released PtUties' actions or inactions with regard to the Loon DocumentS, the Property, or any other ml1tters related directly Or indirectly to the loan evidenced by the Loan Documents. It is understood by Borrower, Beddall, and BPI thaI Lender would not haye entered into this Agreement without Ihe agreement by Borrower, Beddall, and BPI to fuJly n:lease the Reh:ascd Panics under the provisions of this paragraph.

10. Lc:nder's CovenlYll1. Only following the complete and full satisfaction of the conditions set fonh below (i.e., Sectioru 10(8) through (e» and then: having been no default by Borrower, Beddall. BPI, or Halch under this Agreement (collectively, "Conditions Precedent"). Lender covenants 'hOI: (i) the Lender ",11 nol slle or lake any other action to enforce the

6

App. A-6

1074

obligations evidenced by the Guaranty against Beddall. except insofllT os il is necessary to enroree the terms and conditions of this Agreement; and (ii) not take any funher action with ItSpW to the Lawsuit:

a. Lender. at Lender's election, receives th= Property via qeD or Il

foreclosure oflhe Deed QfTrusl;

b. Lender receives the entire Deficiency in aecordBJIce with Seetion 3 above;

c. Lender receives the endre Tax Refund in an IUllOUnt no less than SI,OOO,OOO.OO;

d. Lender receives all of the Assigned Rishts; and

e. Lender receives all oClhe Assigned Assets 8: Receivables.

11. ITlI!!sition and fullher Assurances. Wilhin five (5) days following its execution and delivery of the QeD aM other documents required to be executed pursuaot 10 the lerms of this Agreement, Bonower. Beddall, and BPI shall calISe to be delivered to Lender all ke)'$ to the Property. as well as copies of all books and records pef\aiDiDg 10 the Property, in the possession of Borrower, Beddall. Dr BPI or in the possession of any agents or represelltalives thereof. BOlTOwet shall promptly cause to be forwarded to Lender atl mail aM other commUllications, together with all billings and p8)'Tl1C1\Is which it re~iveJ penaining to the. Property. Each PII/t)' agrees that it shall tJlke all appropriate action and execute any documents, instruments, or convcyanC(! of any Idnd which may ~ reasonably nCGCssary or .dvisable to carry out any of the proVisions ofthls Agreement.

12. Modifi~tiQns. Waivers. Etc. No waiver, modification, amendment, or thangc in \his Agreement shall be valid unJcss\he same is in writing Dnd signed by the party against which the enforcement of such modification, waiver, amendment or change is sought. This Agr~ment contains the entire agreement between the parties relating to the transaction contemplated hereby, and all prior or contemporanco\l.S agreem~nls, understandings, representatiQns, and stalements, orol or written. arc merged hertin.

13. tl2Iilli.

13.1 It is aCknOWledged and agreed that communications tl!1\ong the parties b~to will be done via electronic means, except where physical documents musl be shared (e.g., where volume thereof ressonllbly make lnInsmission viti electronic means impractical or original docurncnts required). For pwposes of electronic communications, communications to LeDder will be addressed to Dou8 Dewar al ddewar@dmccpn.com, with copy to Eugene Wong at wong@lashcr.eom nnd Kevin Hlll1chen at HlIl1cheu@luher.com; and communications to Borrower, BeddalJ, and BPI wilt be addresstd to Brad Bcddall at bflldbeddall@gmail.eom. with a copy 10 Ion Hatch at jharch@edmondslaw.net, and/or to such olher addrcss(es) as each pM)' may specify for itself by notice to the olben;. Noti~s sent under this sectioD will be effective upon actual receipt.

7

App. A-7

1075

13.2 ExcI'pl 115 provided in Section 13.\ above or otherwise in this Agreement. any notice required to be given herein shall be in "'riling, and such notice and any doeument required to be de I ivcrerlto any pl1r1y Wlder this Agreement shBlI be delivered or mailed by first class mail or courier to the parties at the following addresses and win be deemed given when received:

If to Lender:

With a copy 10:

If 10 Borrower, Beddall, or BPI:

With a copy 10:

Douglas M. Dewar 110 James Street, Ste. 100 Edmonds. WA 98020

Kevin Hanchett Eugene W. Wong Lasher Holzapfel Sperry &. EbbeC1on. PLLC 601 Union Street, #2600 Seattle, WA 981014000

Brad Beddall P.O. Box 827()3 Kenmore, \VA 98028

JOn.llthan C. Hatch, Esq. IS2- 3'- Avenue S., Ste. 101 Edmonds. WA 98020

14. future byolvcncy Proceeding. Notwithstanding anything tD the eontrDJy in this Agreement, if IIfld 10 the extent thai any transfer agreed upon herein between Borrower, Seddall, or BPI and Lender is later detennined to have been a voidable preferential transfer. a fraudulent transfer. or a fmudulent conveyance. under either stsle or Federal law. and lIS a result thereof either (I) additiolllll consideration for the transfer and any additional arnoun1$ of fees. expenses, interest or other affinns$ivc damages (the II Additional Pllyments") become due a.nd owing to the estate from Lc:ndcr, or (2) the transfer must be undone and all or a portion of the assets must be returned to the estalll for any reason whatsoever, then notwithstanding llDytlting to the contrary In this Agteement or otherwise; (i) any and all rights and/or obligations owed to ~ndcr under the tenns of the Loan Documents or in law or equity against Borrower, Beddall, BPI and/or the Property shall be automatically revived and rein~a,ed: and (ii) Lender shall be entitled 10 file a proof of claim against the eslale to recover either: (xl the amount of the Additional Payments or (y) ir the tranSfer has been uadone nnd the &SSl:l9 retumcd in whole or in part to the estate. the value of the consideration paid to or received by Borrower. Beddall, or BPI (or the initial asset transfer. plus in ei1ch cllSe 8.IIy defem:d interest from the dalc of the disgorgemenl 10 the date of

. distribution to Lender in any bankruptcy, insolvency, rttcivership or fraudUlent conveyance or fraudulent transfer proceeding. and any costs and C)(penses due and owing. The partics acknowledge and agree thAt the provi3ions in this Section 14 shall be iod~pcndell1 of the indemnification obligations contained in Section g o(tbi$ Ag;ccment

{BALANCE OF PAOE INT'ENTIONAl.LY LEfT BLANK/

g

App. A-8

1076

15. Survival of Representations and Warranties. All representations and warranties made under this ~greement and in any exhibits or docwnents delivered pursuant hereto shall be deemed to be material and to have been relied upon by the Lender and Borrower and shall survive any conveYl1llee of the Property by QeD or foreclosure oCthe Deed ofTrus\-

16. Legd Expenses. If either p:uty to this Agreement brings suit or becomes involv~ in 1liiY other legal proceeding to enforce its rights under this Agreement or (0 recover damages for the breach thereof, the prevailing p<I11y shall be entitled to recover from the other party all ilS eO$1$ and expenses, includinl! but not limited to fees and disbursements of attorneys, incurred in connection with such suit or other pro,eeding, on appeal and tn post-judgment collection proceedit1&!.

17. Coua\marts. This Agrecrn~t may be clIccutcd in multiple counterparts. each of which shall be declned an original and togetber shall be deemed one instrument. Except with rtspcct (0 documenlS for which originals are required as a matter of applicabh: law or procedure, this Agreement and any documents 10 be execuled PUJS1llU11 hertto may be: executed by either an original signature or by signature tronsmined by facsimile transmission, email lIt\achment in portable docUl'llent format C.pdf), or olher similar process. Each copy so executed shall be deemed to be I!I\ original and all copies so executed shall constillltc one: and the same agreemcnl.

18. P!!I1Igrnph Headings- The paragraph headings conlllined in this Agreement are for c:onvcnicncc: only IUld shall nOI be deemed 10 have modified. e'xpanded or limited the provjsion~ of chis AgreeJmI\t.

19. Successors and Assigns. This Agreement shall iowe to the benefit ofund shall be binding upon the res~tivc succc.ssors and assigns of Lender and Borrower. The Lender may assign any of Ihe benefiu under this Agreement without the consenl of the olh~r pany. Bonower. Beddall, lUld BPI may nol assian any interest or obligation herein without the prior written consent of the Lender. which cOFlSent Lender may withhold 81 Lender's sole and absolute discretion.

20. CQnfider.tialjo:. The panies agree 10 ktep the It:Il1lS of Ihis Agreement confidential except as may otherwise be required by law or for dissemInation 10 the accounting and legal advisory; orlbe parties.

21. Authority. Each person executing thfs Agreement on behllif of an entity represents and WOJ'l'llJIts thai he or she has full authority 10 do so as Ihe lawful and binding att and deed ofsuch entity. . .

[IIALANCE OFPAOE tNTENTIONALLY LEFT9l.ANKI

9

App. A-9

[077

" ~

21. Applic.ble Law. Thi. Agr~mr:nt shall be consuued in IIQ:(lrdaDce with the iotelllaJ Jaws of Ibe State ofWashiDgtau and veaue for IInY 8I;!ion shalilio in KIna County. WashmgtoD.

&I WllNESS WHEREOF !pc ~ heve c:xcwted this AgrcCDII:nt as of the ~ Iir;t set fol1b ebovc.

BORROWER: LENDER:

LEALLC a Wl1$hinglon limiled li.abilily colllPo.oy

DougJlU M. Dewar

SIDDALL;

~dl~Y BPI:

THE UNDERSIGNED APPROVES AND ACCEPTS TInS AGREEMENT AND AGRE:ES TO BB BOUND 1HEREBY IN ALL RESPECTS, INCLUDING wrrnOUT LIMITATION. mOSE OBUGATIONS OF TIm UNDERSIGNED UNDER SECTION 4 OF nus

- C~ ~ ~. tl'l6I~~1 ]0

App. A-IO

1078

.'

EXHIBIT ".0\" (Quit CIJim Deed)

AFTER RECORP1NG MAIL TO:

Eug~ne W. Wong, ESQ. Lasher Holzapfel Speny & Ebberson PLLe 601 Union Sl1eet, #2600 Seattle, WI\ 98101

QUIT CLAIM DEED

Reference ~o. N/A

Grantor: LEA LLC a Washington limited lil1bility company

Grantee: LEA HOLDINGS LLC a Washin~ton limited lil!bility company

Abbr. Legal: Multiple UnilS, Lea Hill, Condo Dc.c. #20070503001134 Vol. 68, Pgs. 60-69 (see Exhibit "8" fOT fulllegaJ description)

APNs: Sec (oHowing page.

119~1)1S9196.S4 OOCI } I

App. A-II

1079

42393D-OO I 0 421930·0020 423930·0030 4239,9·0040 4239)0-0030 H3930-0060 423930·0070 ~239J()'OO6() 4239l0-o090 ~23910·0100 -11';930-0110 'll393()'O120 ~2)9JO-OI 30 4 '23930.0 140 ~2l930'()ISO 423930-0160 423930-0170 ~23930·Qi 80 423930·&190

423930·0210 42j930'()220 4239JO·02)-) 423930.02;0 421Ylo.c290 423930.()lOO ~2J930-0390 4l391D-0410 423930·0410 41191()'(l.I~O

423930-0460 4l3!l10-oc70 423930·0~OO 423930-0530 42)9~O.()54D 423930-0550 423930·05S0 423930·0600 423930.()610 423930·()620 42393()'O630 4239JO·066C 42JII31l-0670 ~219)o-O(i80 4239jO.()69G 42::;930·0700 423930'()710 423930.0720 1\239:;0-0730 42393l)·O740 423113M180 413930·0790 ~2393Q.(1g00

423930·0810 423930-0830 t23930·01S40 4)3930.0880 423930·0890 42H3Q.(1900 ~1>930·0910 423?)0·O9l0 423930·0970 ~23930·0980 ~J39)O·09\lO 4239';0.1010 423930-1020 41mO·I040 423'HO·I080 421930,1090 42393D-lIl0 4239:;0·1120 o!239JO-I140 423930,1 ISO 423930·1160 423930·11 SO 423930·1190 "23930·J1oo 4H93()"1240 423930·1250 423~)O·I270 423930-1290 4239)()"1J 10 ll39)0·1320

THE GRANTOR, LEA LtC, a Wuhinilon limited liability company, for anti in consideration of Ten Dollars (SIO.OO) In I\lInd paid, conveys, lind quil claims 10 LEA HOLDINOS LLC, • Washington limited liability company. 'he following dcsC:I'\'bed real cstale, sitllalcd in Ihe CounlY of Kins, SlIIle of Washington. logedlltr with all afier acquired (ille of the gran:or therein (the "ProptnyU);

DEVELOPMEI\.'T RJOHTS UNJTS I TIiROUOH 3, BUiLDING A UNITS I 'T'HROUGH 4, BUn.oINO B l..i'NITS J rnROUOH 3, euu,oINO C UNITS I AND 2, BU1LDING D UNITS I THROUGH 3, BUILDING E WITS I THROUGH 4, BUn.DING F UNITS 2 THROUGH 4, DUn..DrNG G UNITS I AND 3, aUILDrNO I UNli I. Bun.DINO J UNIT S, BUILDING L UNITS I AND 2, BUILDING M UNITS 2 .~''D J, BUn.OrNG N UNIT I, BUILDING 0 lINIT2. BUILDING P UNITS 102 THROUGH 1001, J 07, 109 THROUGH 112,203 THROUGH 211. UNITS 303 THROUGH 306, 308, 309, DUILDlNG R UNITS 101 nmOUGH 104, 108,202 THROUGH 204, 206, 207, 301. )05, 306,308, DUILDPt'GS UNITS 101, 10J THROUGH 105, 101,201,202,206,207,302,304, J06, 307,

I3UD..OfNG T

1l961J\s~l~S4 DOCI 12

App. A-12

1080

, .

LEA HILL (FORMERLY CARIUAGf SQUARE) A CONDOMINIUM. ACCORDING TO THE CONDOMINIUM DECLARATION RECORDED UNDER RECORDCNG NUMBER 2007050)001 ))4. AND AMENDMENTS·THElU::-rO. IF ANY. AND IN VOLUME 68 OF CONDOM IN ruM S. PAGE(S) 60 THROUGH 69, rNCLUS]VE, IN KrNG COUNTY. WASHINGTON.

11lis Quit Claim Deed is an IIbsolute conveyunce of title. in effect and (onn. This Qu II Claim Deed is not imende~ 11$ a Incrtgage. tellst, eOlweyanee or security of lilly kind. This Quil Cloim Deed is given in lieu of foreclo3L1lC of !hilt certain Deed of Tnut on the Property rtcorded under Auditors File 1'10.20061207001057, which Deed OrTCUSl snell remain as a valid lien on the Property Dnd $hall no! be merged into litis deed nor otherwise be extinguished by delivery, acceptance. or recording oflhis or any other deed \0 Granlce. Notwilhstanding RCW 61 .24.100(1), the Grlmtce', acceptance of this Quit Claim Deed does I1cl exonerate Bradley E. Beddall lTom lilly liability as guarantor for the debt secured by the Deed of TruSt. This Quit Claim Deed is inlcnded to eon\'cy to Grantee any and allleglll, ~uitable and other rights and interests of the Orantor of any and C\'cry nalUre whalSoever in Dnd to lhe Property inciuding.bul nOI limited to, an)' righls Gralllor moy hereafter acquire and nny rights of redemption now or hereafter ~elti by or arising in favor of Grantor or .ny person or entity by, lhrough Dr under aranlcr. Without limiting the generality of the foregoing. Granlor hereby wnives and forever releases and relinquishes' any and all rightS of rtdemptlon Dnd similar rights of any nature whatsoever which it may have or which mny Ic~rue in Ihe future in corlllcction wilh the Prcperty.

DATED Effective lhe 29'" dDY of December. 2009.

BORROWER: GUARANTOR:

LEA LLC a Washington limited liability compllllY ~

ddall, Individually

[NOTARY BLOCK ON FOLLOWING PACEI

App.A-13

1081

STATE Or WASHINGTON

COllnryo{ ~sL... l I 55.

}

I cet1ify Ihal I know or have satisfactory evidence Ihllt BRADLEY E. BEDDALL is the pe~OIl who lIppcar~ berore me, and said person acl;nowlelll:\cd thAt ne sisned this instrument Indi\'ldualiy lind as the

. President of Beddall Properties Inc. and acknowledged 1110 be the fru and voluntary aCI of said cemplny for the uses and purpoies mentiened in this instrument.

,~ -. DATED:This (0-day ofs...L!~~~~.-. dol p.

App. A-14

1082

EXHIBIT "8"

R.EnrR.~ RECORDED DOCU,'.!ENT TO:

E\.Igcne W. Wong LllSher Ho12JIpfei Sperry & Ebberson PLLC 601 Union Street. 1/2600 Seattle. WA 98101

Reference No.

Granlor:

Granlee:

Abbr. Legal Des.:

Tax Parcel No.:

4n930..oo40 42;;930-4010 423 930-0 110 423930·0160

.:123930-<1270 423930-0390 423930,0460 4239l0'()S40 423930-0600

423930·0660 42)930-1)700 4239J[)'0740 423930-<1&10 423930·0891l 42>930'{)9S0 ~13930.IOIO 423930·1090 423930·1150 423930·1190 423910·1270

ASSIGNMENT or RIGHTS BY DECLARANT

2007050.300 1134

LEA LLC 8 Washington limited fiabili!), company

LEA HOLDINGS Lt.C a Washington limited liabilil}' company

Put. E. V. of S. W. 1/4 • Sec. 8. Twp. 21 N., Rge. 5 #, W.M .• King County. Washinglon (full legal on Exhibit "An)

See follo .... in&

41l930-<)OI0 42393[)'OO20 4239JO'{)()JO 423930·0050 4239lG-a060 423930.0070 421910·0090 423930·0100 4239l()'()110 423930'()UO 423930.0140 423930.J)ISD 423930·0170 423930·0180 42J9)()'()190 4239';0·0210 423930.J)220 423930.0230 4H930·0290 ~13930.J)JOO

4:23930·0410 41393G-a420 423930-0450 423930.00170 423931).0500 423930.05)0 42~930.J)SSO 42)9~0.J)S80

423930·0610 4239)0·0620 423930-0630

4239)0·06;0 4239)~6S0 423930-0590 42393().O710 4239J()'{)720 423930·07 30 42l930·0780 423930-()790 423930-0800 423930-0830 423930·0840 423930-0880 423930-0900 4239~0.J)910

4239:>0.0970 ~2)930.J)980 J23930-C990 423930.1020 42393()'IO~O 423930·' 080 423930·1110 n:i9)().lI20 41393 O· 1140 423930·) 160 423930-1180 4219'}O-llOO 42l93(}.1240 423930·1250 423930·1290 423930.1310 423930·1320

15

App. A-I5

1083

,

The undersigned Declanmt, pursuant to the Amended and Restated Condominium Declaration reeorded under King Cowlty Auditor's File No. 20070503001134 (the "Declaration") for Lea Hill, a Condominium (fonnerly Carriage Square) pet Condominium Declaration of Carriage Square, a condominium under King County Recording No. 8403140775, as amended lind as shown on the Surve}' Maps end Plans for the Condomi!1iwn recorded in Volume 68 of Condominiums. pllges 60·69, pages 70·80, lind pages 81-88, King County, Washington (the "Condominium"), hereby irrevocably wigns to Lea Holdings LtC. a Washington limited liability company ("Gnnlee"), the rightS of Declarant under Article 3 t of the Declnration to assign, transfer, sell, least, or rent all or a portion of Ihe Condominium then owned by Granlee. for purposes of clarification without limitation. the foregoing assignment is intended 10 ensure \he Grantee can freely assign, transfer, sell. lease. or rent all or a portion of the Condominium then owned by Grllntee 0$ if Ihe Grantee w:lS the Declarant under Ihe Declaration.

DATED Effective December 29,2009

STATE OF WASHINGTON

Counl}' of ~i1,... } } 5S.

I

LEA LLC a Washington limiled liabililY company

I cenli)' thol I know or hove S8tisraclory evIdence that BRADLEY E. BEDDALL is the persoll who IIpp:1Ired before me, and SIIid penon acknowledged II1BI he $Igned Ihis instrument as the President of Beddall Propcnits Inc. al1d acknowledged illO be the free and voluntary lief of said company for the uses and purposes menlioned in this instrument.

,1961J1S91'1&l( DOCI12Il91W 2

App. A-16

1084

#

Exhibit "K 10 Assignment oi Rights by Declarant

DEVELOPMENT RIGHTS UNITS I THROUGH 3. BUILDING A UNITS I THROUGH 4, SUTLOG-IG B UNlTS I THROUGH :l. BUILDING C UNITS I AND 2, BUILDrNG D UNITS 1 THROUGH 3, BUILDING E UNITS I THROUGH 4, BUILDING F UNITS 2 THROUGH 4, BUlLDING a UNITS I AND 3, BUILDING I UNIT I, Bl;lLDING J UNIT S, 8UlLDING L UNITS I AND 2, BUILOING M UNITS"} AND 3, auu..OrNG N UNIT I, BUILDING 0 UNIT 2, BUILDING P UNlTS 102 THROUGH 104, 101, 109THROUGH Ill, 203 THROUGH 211, UNITSJOl THROUGH 306, J08, 309, BUILDING R UNITS 101 THROUGH 104, 108,202 THROUGH 2()4, 206. 207, 301,305, 306. JO~, BUIL.DINCl S UNITS 101, 103 THROUGH IDS. 107.201.202,206,207,302, J04, 306, )07, BUILDINGT

LEA HJtI.. (FORMER!. Y CARRJACiE SQUARE} A CONDOMfNnJM. ACCORDrNG TO THE CONDOMINIUM DECLARA nON Il£COROED UNDER RECORDING NUMBER 2007050jOOII34, AND AMENDMENTS THERETO, IF A1oI'Y. AND IN VOLClME 68 Of CONDOMINruMS. PAGE(S) 60 TILROUGH 69, INCLUSrvE, IN KING COUNTY. WASlUNGTON.

11961J1S\>l965C.POCI 17

App. A-I7

1085

SPECIAL ?OWER OF ATIORNEY

I, BRADLEY E. BEDDALL (the "Principal" or "Shareholder"), residing in King County, Washington, hereby appoint DOUGLAS M. DEWAR ("Dewar"), as my 1I!10rney in facl, and give De ..... ar full power and authority, in the place of the Principal, to sign and deliver any and all documentS deemed advisable by Dewar to carT}' out the obligations of Principal as the sole shareholde~ of Beddoll Properties [nc., a Washington corporation (the "Corporation"), .s the sole member or with respeet to L~a LLC, 8 Washington limited liability company. The power of attorney grIInted hereby is a power coupled with an intercst, ·is an irrevocable. durable power of utlorney that survives the Shareholder's incompetency or dCDlh, may be exercised by Dewar by a tacsimile signature as the attorney in fact for the Shareholder, survives the assignment or attempted assignment of Ihe Shareholder's shares, and empowers Dewar 10 Bct to the same extent for any successor shareholder 10 the Sharc;holdcr's shares in the Corporation. .

This Special POlver of Attorney will cellSe and be of no further effect one (I) year from the dete hereof, but such automntic termination shall be without prejudice to any actions previously taken by the above named anorney in facl for and on behalf of the Principal.

DA TED Effective December 29, 2009 '( •. 0 t>.. ~ ~~I

STATE OF WASHINGTON) ) $5.

COUNTY OF KINO )

I c:ertify Ihat 1 know or have satisfactory evidence thaI BRADLEY E. BEDDALL signed this ins(T\Jm~nt and etknowledgt it to be his free ntllry /let Cor Ihe uses and purposes mentioned in lhe instrument.

4

P nted Nam~&.l ~.

OTARY PUBLIC in and for the laIC o(Washinglon

Residing al M="= j.(' r...::rs...c. My commission expires 8" 1"1 • do, (J

App. A-I8

1086

CONSENT BY MANAGER OF

LEA LLC

The ul\dersigned, being the Sale Member and t>.1anager of LEA LLC. a Washington

I imited liability company (the "Company"), hereby consenlS in writing to adoption or the

following resolution:

RESOL VED: That Douglas M. Dewar, as Special Manager of the Company, is hereby authorized to sign, on behalf of the CompJny and the undersigned Man~ger thereor. any and all instruments. agreements, deeds. and documents, illchlding whhoUI limitation. documents providing for the conveyance or other disposition of the Company's real property, assignments. bills of sale. Jeases, and any other instruments, agreements, and documents necessary to modify, amend, andlor llSSign the rights of the Compan)' under the Amended Dnd Restated Condominium Declaration recorded under King Count)! Auditors File No. 20070503001134 (th!! "Declaration"), and 10 satisfy tnc: obligations of Ihe CGmpany with respect 10 the foregoing.

FURTHER RESOLVED: That Ihe power conferred upon Ihe Special Manager hereunder will cease lind be of no furlher effect olle (I) year from Ihe dale hereof, b," slteh lermin:ltion or expiration shall be without prejudice 10 any actions previollsly laken by the above n!lmed Special Manager ror and on behalf of Ihe Company.

Dated Effective December 29, 2009.

LEALLC a Washinglon limiled liability company

8y: B~dDn Prop~rtic~ Inc­o Washington torporalioll Its: SOle Member &. Mani&~r

11961l\s919i5. DOC) tl/29lOP 5

App. A-19

1087

, .,

CONSENT BY SHAREHOLDER AND DIRECTOR

OF

BEDDALL PROPERTIES INC.

The ondenigned, being the sole sh9.((holder and sole dlrectnr of BEDDALL

PROPERTIES INC., a Washington corporation (the "Corporation"), hereby consents in writing,

pursuant to RCW 23B.07.040 and RCW 23B.OS.210, 10 adoplion of tile following re$OIUliOn$;

RESOLVED: That the Cotp()1'81ion's President, Bradley E. Bcddall (ftBcddaUU),

is hereby authorized and directed to sign. on behalf of the Corporation and as the sole member of LEA LLC, Washington limited liability company. the Propmy Settlement Agreement, n copy of which is attaChed hereto as Exhibit A, whereby LEA LLC agrees lO convey to Douglas M. Dewar all OfilS right, tllle and interest in the property commonly known as LEA Hill. a condominium (formerly known as Carriage Square); and

FURTItER RESOLVED: Thai Beddall is rurther authorized and directed to do aU thing$ and sign all documents necesSllt)' to oarry out tbe terms of the: Property Senlemenl Agreement.

Dated effective December 29, 2009.

~~(~edb~ aTadie: Bcddall Sole Sharehol.dc.r & Sole Director

20

App. A-20

1088

:

EXHIDIT"C" (Power of Attorney and Fonns 2848)

SPECIAL POWER OF A TIORNEY

I, BRADLEY E. BEDDALL (the "Principal"), resident of Snohomish County, Washington. bereby irrevocably appoint JONATHAN C. HATCH rHatcb"). lIS my aHomey in fact, and give Halch full power and awnority, in the placc of the Principal, to sign Ihe Principal's 2009 Federal Tax Return and to endorse and negotiate. only for the benefit of DoUSlas M. Dewar ("Oewar") and any sll~essor and/or assigns of Dewar, any and ell refund checks associated with the Prin!;ipal's 2009 we l'etum along with the power to receive said refunds and checks. The powm granted hereby shall Include without limitation th~ power of Hatth 10 execute, acknowledge, and deliver any other document or in$1rumenl Hatch or Dewar consider desirable to ac:coruplish the purposell of this Special Power of Attorney and Dewar's receipt ot all refunds associated with the Tax Return. The power of auomey granted hereby is a. power coupled with an interest. Is an Inevoeable dunlbte power of anorney \hat survives the Principal's Incompetency or death, and may be exercised by Hatch by a facsimile signature as the anomey in fuct for the Principal.

This Special Power of Attorney is irrevocable and may not be ttnninated by the Principal or otherwise.

DATED: Oecember29. 2009

I certify thaI I ~ or han satisfactory eviden~e that BRADLEY E. BEDDALL is the person who appeared. before me, end said j)CF$On IlCknowledged thet he $iglled this iflSlr\lment Individuolly and o.s the Presidenl of Inddall Properties Inc. and IlCknowledged II to be the ,= and voluntary oet or said c;om~ny for the uses IJIld purposes menlioned in this'instrument

ThiS_dayor1 5 MAR 2010.2010. () .

, YOIM.UL-Paricha1 P. Hines Consular Associale of the ) r!;ic~d States of America

(ST I\MPJSEAL) N8Illc (typed or printed): ...,,_......,..,...-____ _ NOTARY PUBLIC in and for va EmhdSU ReSiding It e!!m.a kbiC. I 1)-,0. ',1.2:;::'0 .,J

Myappointmcntd6ires: liidsfinit<::

21

App. A-21

1089

..

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\1961J\S919&S4 DOC) 22

App. A-22

1090

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p96ll\St1'l6~ DOC) 23

App. A-23

1091

J , ).

~~~I Power,of Attorney """ .......... ,.

and Oecloratlon of Representetlve '-CUiIMONt

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24

App. A-24

1092

..

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1 '9'51 J\S9l9~S' DOC) 25

App. A-25

1093

Leona Phelan

From: Sent:

Ken Smith (Traner Smith & Co" (PAs) <KSmith@tranersmith.com> Thursday, April1S, 2010 2:54 PM

To: Doug Dewar Subject: RE: lea LlC

See below

Thanks Doug

Ken

-------------------------TRANER SMITH & CO., PS C~rliji(d Pllblk Al"l'oJlIJIIlIIls

Kcnncrh G. Smith CPA 110 Jamc~ Street, Suire 106 Edmonds, \'(/A 98020 425.640.8650 Tel 42S.640.K655 Fax KSmirh@rI'rllllcrSinjrh,com http://www.TmgcrSmitb.cQm

-----------------------~-CONHllIi:. IlAt.l1 \" NOll0'~ ·n,. illf.)mlll(iOll in Ihi. eleclronic 11.,11 ",",sm.ssien is .. pUy privi"'I1<~ 111<1 c .. "CHltnliool inrOfm.1iun inl.:ndcd only r."I1, •• ", of the it,~iYidunl .... "Iily n: ... n/ .h<l\~, Ir'h~ r ........ r,lIi, ",,,ssu1'" .. ""' lb. ulI<ndcd ",",plcm. )'I'IInre hcr<by no,ifkd ,hul on)' dls<t1t1lnocion. d.Slnbuti<llf oreoPl' of II", IriUl>1l1issiun i, ,"(.11) P""IIhittJ, Ir )'''u hU\' .......... i"' .. Ih;'I"'~II<m",si"n In .rrOl'. pl.,1>C del.,." Ihe meso. and immedlatel), nQl/I)' US by "'·m.il or t~l<phonc nl Hll) b-IO.IMn. IIllM\Ct Coulmu.\icutN,ld UJe 1101 ttt.'U~ :uad $:uhjecl tn pu ... "ible ~bJa cUIJlIf)htm. dLh,=, ;It.:chfcnball)·()1 (\0 JlUrpc.~ und may CJU1ln \'irusc.~. "Ur1hcnu(lrt'. r:... ~nilil is:wn lIlforn~ Ul\1hod ",t'fomnNnit3tian iIIId ror tIlCM.·ICo.WII~. i1 "iJl 'tI.\mJl1ll~ be inoflprnpriDit 'u r~I)"'1ft luJvicc "tOLDin~'iJ in un c·mhil ",itnnul obU1inin~ ''''mlt:1I .:,," I'irm~I"ln ('If it. h h fM"Iw C'USh.Ml1!lfY '" ~n" d~""c",c; :lI1d ~hct d.',3 "ia dsc I",emel nod W~ will cOll:'i\J\. ... Ihat \''; h,.,'C ft!C<'j,'(d '\JUT implicit ","Tnli~sion (u <It' SU UAlt'u ".: rC't.;j\c :-,..«itiv in"n":'ktn) ,;um Y"\.f ,'ItJcTu..,-;e .• "'''''"' (,"lye u n:'que';;l fnlll' )"('n. ,,8.1 c·mni't \\C' \~iU tlCQl1h:u as :IUdwfh~' I" rc:J'l:y b)' c·mt .. 1.

or ... (ns~ (ompli;Jm:': with r~ulfC'mcnt) un~ b)' th~ JR.~. ')DI1\."f ~Ilh &. Co .• , • .s. IAfulTnt ynu IMi :my lJ S tbh.'T1I1 U\; ::ad\'IC~ conl;llrcd manu C:(lInIflWuc;,,,,,,, (Ine1m11"" IlD~ utlU!:hlU(nt5) i:Slltl, in\&"mlaJ ftI"\\rJurn (v be usL"d. Gild (',annOi hC' U~U. I,., the f'1IfJ'Il"e' Orcl) u\'I\wmG J"C'lArtle" uncIrr 1M- Inh:m:J1 Rcvcnu.: Codt:« (II) rromnhnc. IMfl.t.1In,

1)1' r~"(unlllh.1hhRi ill llltOlMr p.:In)" any lnJru::JC:&Jon Dr m:;,ucr udJIC'5~-d h~reln

From: Doug Dewar [matlto:DDewar@DMECPA.com) Sent: Thursday. April IS, 20102;16 PM To: Ken Smith (Tl1Iner Smith &. Co., CPAs) Cc: Eugene W, Wong; Jonathan Hatch Subject: RE: Lea LLC

Ken:

Thanks for getting everything done so quickly -I know you got a lot of information at the last minute. -I waS 11.15\ able to access Brad's returns on line and I have the following initial comments:

1. Brad's address for his 1040 and his 1045 should be care of Jonathan Hatch. Since Shirley is not a pany to the settlement i!,&reement, she is not bound to give the refund check(s) to Jon, We changed address to Jon Hatch's

address 2. ~at Brad answered on schedule B that he has no foreign bank accounts. I don't believe that answec.is

correct based on what he has told me. I will check on this item and the hl~t'account baTance during the year and will file the FBR report If reqUIred.

App. B-1

823

3. I see nothing that shows the sale of his apartment house at 588 Elm. I believe he sold it to Mel Steinke In July 2009. Sold 1/12/2010

The only change I Insist on is tile address change .

If I find any further issues. I will advise you Immediately.

From: Ken Smith (Traner Smith &. Co., CPAs) [mallto:KSmlth@tranersmith.com] sent: Thursday, AprlIIS, 2010 11:15 AM To: Doug Dewar Subjed:: RE: Lea lLC

Doug

I was just meeting with John Hatch and he signed all the Beddall Properties Inc .• Brad BeddaU US Income Tax Return Form 1040. and Form 1045 Applicallon for tentative refund.

Valerie Harrell from our office is setting up file share for you to review Ihe returns.

We have the Form 1045 ready to registered mail, return receipt requested to the IRS.

The address we used was PO Box 82703. Kenmore. WA 98028. Shirley Is to deliver the cheeks to Jon Hateh as they arrive. Shirley mel wilh Jon and I this momlng to discuss in detail.

Please let me know of your approval.

We intend to etile the personal \ax relum today.

See attached cover leiter, the refund is SI. 196,433.

Thanks

Ken

-----~-------------------TRANER SMITH & CO., PS C~,.ti.ftfd PI/hiit' ./fmJlmfllnlJ Kenneth G. gmith CPA 110 James Street, Suite 106 Edmonds, \'11<\ 98020 425.640.8650 Tel 425.640.};655 Fa:­KSmith@'l·mncrSmith.cnm htqd/www . .fmnerSmith.com

-------------------------<:()~fIDr:NT1"LIT'· No'nCE: 1lle .nformiUion in tlus tl\'Cll\lniC' an;1I1 uWI:-mi:-,ilnJ IS h.~I1~· DIi\,jlc,C'd and COOli41cnlj3t inti'm,u'~\n in'tnJtd ,,,,I) ti" the 1I"",· .. r""'IC'

in,in;dll:11 (\( -:ntily nalR1l't] iUtrQ\·c. Iflhr C\::1dtr of thb 11k.'!-.Sft,l;r is n'" lht' lmcll&:J (<<irknt. ~· IIU arc:- herd» nl.llified th:ll :my di:J~cmini)tt('ln. dtSlIlwtion or c('IPY (l(tJIC 'J\lR.~i ssi,\I'\ ~s s'n~l)' tlrt)t\i~i(cd If you h:w( (~C(i\'cd thiS (lanSRlihi(ln in (nor. pkQS( dt!clt Ule nll::"o~( Itnd imrucc.lii"ltdy nO\ity us by E·,nail 0' lI:lI!phollc 1111 ("2S) 6-IO.S(,SO In'l"1l1\:' (\1",n1u1,io:.oJl1twnl nn!' "", ~CUIl: ilIld ~ubJcct 10 ptr,isibl\' d~'1"' CVllllpli\'I4l. cith4.'r at;d..ltnt.ol1)· c." lin rurtK'(..!. 3.nd tnlIy ~tain ViN$("S. Funl\\1Inorr. c· mbil i> un infunnni nu:l1uxl "I' ~,"\lu\uni(ut;N1 ;u,d lor th~ 'asm\s. it win nunl\nll~' k inuppropJI.,tc ,-" cd)' c\\\ n,I"' i~c clJnl:,\~cd in an ( ·mrul u 'jt,ho\J1 t,)b~jDtn8 wrincn

App. B-2

824

l.'t')nlirrun,tiOjlofit II i~ no," t;~l"OIll.~(~' h) ')cnd ~1X:UIm:1I1$ W1d Otiter U:1l:1 'Vn. Ibe In'tm~l a.I"IIJ \\t' "iii ,.msidt'r Ihat we: JulY\! r':l!Clv~d )"Ilur implkh pcrmbsiOfl U) do sn unless \.\'t t~ld\'1! ~lfle ill"iIn,n:1ions rrom Y(.IU Illh.tn\"~. U',,,,,( r\!I".\:h'~ 6 Icquc:u (f\'kfn )'uu \'ia c·mail. \\".: ,,\iff tn:al th:u aC; uulho,iJ), II.) I\!pty b)' ~·mail.

rO,,"""IItlrE:' ~lm~JAll .. "C.' wuh rtqUIn:n1...'1'Lf:S amp.'Wd b~ 11,(" IkS. TfJtIC'r Smith ~ C.., • 1·.$ l,a(l.1l111) }Oll.lh,1t :m~ 1) S. r~tkr.d &:'I" ::ach'!(1; CU4U""I",,'tI in lhl" (tlmmlJllicltiOtllinc)urliJ1~ AlIr ;J~Mmntb~'lI Ihlll~h,~ndc.lll( \4fifllm to t..: us~d. nr~ .. ·.Ull)'" bo: \i)(..l. r~r Il~ P~l'JX~~ ..,{ Cl);J\'Uld'lIll: p"-n;aJtlCS under lite Inl .. ·trud fb!\"Cnll\.: l"ocIc: or (ii, pr'GIJ}Min", nl3.lkthn~ \)f m:C.1\nl .. 'ldIllG In ~nnlhu.t r:lf1V .ny f~lI~ac.iM or malll.~ ;Jj,krn.·.~!I"'d hCltUJ

From: Doug Dewar [mailto!DDewar@DMECPA.com) sent: ThursdaJj April 15, 2010 10; 17 AM To: Ken Smith (Traner Smith S. Co., CPAs) Subject: RE: Lea llC

Ken: -How is Brad's relllrn coming? Per the terms of the settlement I am slIpposed to approve It before it is fl!:.d.

Be sure to use Hatch's address.

Doug -

3

App. B-3

825

leona Phelan

From: Sent: To: Subject: Attachments:

Doug

Ken Smith (Traner Smith & Co .• CPAs) < KSmith@tranersmithcom> Monday. June 07,20104:32 PM Doug Dewar FW: Form 1045 & Form 1040 Beddall 2009 Beddall 1040 PDF; 2009 Beddall 104S.PDF

Please find attached the filed tax returns 2009 Form 1040 and 2009 Form 1040 as reqyested for Brad 8eddall. We were given permiSSIon by Brad Beddall to release the attached returns based on your request.

Please open the attached with the last four digits of your social security number.

Thanks

Ken

TRANER SMITH & CO., PS Ce11i/ied Pllblic ./-IaV/III!tl/l/J

KCJinelh G. Smith CPA 110 James Street, Suire 106 Edmond5 .. WA 98020 425.640.8650 Tel 425.640.8655 Fa.x KSmtth@}J·[iltlcrSmjlb.!;(HD hup:llwww.'frap"rSmil.h com

CONflOI!l\TIALIfY l\UnCE: "nIL' hlli)1"11);1,j,m in this dC":lrunk lIIaillrun ... m is ~ ipll b kSlIlIy prh'i1cgl'u ami ({\1I1idcrtliDI i.,fi1nnnlilln Inlcl1Ik\l4.lOtr lor 1M' u!t\! ,,(,he Imfi"idu;11 or ,"BUtr naR'k."1.I a.bvn' , Iflht! I'\:adcr urthi!lo mc.::~!u!:;c i~ lUll tht> inh:_nu~J r~cipiL'nL ~' illl UH' her~~)' n\ ltitiL'd Ihat ;my di»\cmimlli(IO, dlslrlbutlon ('If copy (lilhe' Ir~m~llli~';I,)1II'" sll1Cll~ pra'hitHh:d I(yoll ha\· .. · n:cci\'cd th is trulls.tl1i~ s i \} l l ill..:m·r, plt,:-at.: ~.l..-h:l~ 111l: Illcs:\.uf': :.IIIU itum ... t.li~h.:ly nutir~' II" hy r!·Imt'l or lc:lcph.mc fll (-12;) /,40·8650 Inl&:ln .... l C,ltllnllll\t\:.;tli._ms :lrt n\,ll :t.CCUt..: lilld subj,,'cllo t)lJjsihk d;u.1 (vrrupli~m. dth!.'1 ;'It;I: IJl'IIUtl1y vr (Ill InHrhl:~' , . 111~ IUUY I,;,ml:,in \'iru~, rUnh~Tllwr\:. c­In~it i:'i un illr..'rm:11 01,,'11100 .,t" c{)-lIlllh'r1i~IU\~n :1I1d for lhcS i,! ft"olsons . il will n,1flnallr h~ il\nppropfiatC' M r.:l)o' ,))I nd\'icC' cuntoinl.'U it! :til t-maH wjtJK1ut ublninint wlith,'l1 C'Olllifl1l:lliun " f it t l is I1(1W ClIs tUnJ:llY Itl ."",'nd JLl\:lInttl1h fUld .111u:r oiSht '.111 the In1em .. ' 1 :mL1 \\t: Will Ct\1I~i{kr thlll We Ita\ c n:cch ~\ 1 )'(lUr imrhdl rcnnis!\ion to dl\!>O

uuks~ \\C r~c('t\"r..' ~~I."cit i r..' imuLlcej('l11$ 1'I'}ln YI)U vtilcn\'i:--r, If \\~ fI: l."d,'c a l\:qul::"I( tiltlll ~.) tJ \ iu c-m ;ljl. we will In':iIl Ih;J.1 J '\ aUlJ'h)r i l~ ' f\l ~Jy hy \:~lIIail ,

T(J \'nst,1f~ (omplunc(' \\ollh rC"lUtr'L:m(1'll~ Imr-t'l .. -d h~' II"" HotS. Tronn SmIth &:. Ct"'), r -' inform' ~tJu lIul nln U.S It-de rll ll:\., J.hil:c cnlll:lin .. "d in Ihi3, CllfT1I11Un i \·~\lH.m fJn\1udm, ;In) ua;h:hll')('n\.~) is not 1n1t'1h.ltrJ nr Wf1Itl' n lit bi.' w..:tJ . anJ ,annal tx- lIt;('d. I~)J t~ DUI"flt)~ raf (,. Q\"(I :d1n& pcn~lli~ unilCT Ih ... Inh:rn lt' ~(,'\'cnut' CUo..k (lr (Ii. prom\)lin~ I";,,kcun~ 01 't'\,;onllllt"nJill~ :l,Illnu-lhcr PJII)' ~n~ ' U';:I"~';llon .,r muU..:r ~drt'S$<:l1 heJ'C ln

App, C-I 831

Ryan Onosko

From,

Scnl : To:

Subj .. ct:

Al1acnlllenls:

Doug

t: ... :., I Sl1lllh {r, ,H' .... ' t)'Hllh &. lo. \' P,l.~J • Kt-}HHthct,u"AI\(,fSfmth CO", ...

1'.lul1da,. June 1.1: ?O JO .1 .ll Pf-,\

DOll9 0(,.0,11 fl.\' F"",, lO'l~ ... fc,," IO-le Sf'd(!,,11 iO09 Bl'llc1,lll 1,-,,10 PDF ;0(19 B~u(l.ll1 1045 PDr

Ple:lse 1,,'ld ,HI,ICh(:,! Ihl;: [,1<;(113A rell.rl'$ ,'1).)9 Fu"" ~O.li\ ;,,\(1 2lJtl9 FlJrrIl 10aO ;15 requ<.:sled 10! 8r"cj Beadall INe were

g~ven pf;'{"I!~$jon 1j', 8r~d L3EH!lJ;:\U to {de ... '!:~ th~ ~li:.l~l,ec.t IPHtrH$ u3~cd on you, request

Ken

--------- --- ---------TRANLlt SI\IlTH& CO. I'S

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,finl;,," .'I' " ""1 Ii lit , , ...... ,,,,,'1;1 .• 1\ , .• ~,.".j .1", ',"I~I'I .... ,,1 .. 111~' .1 .... I ' .' ."\.' ".I~' UI\.I ,,,.,' ,.\." "I ~" 'H:"IlI~1 'h.11 n .. · It,,.,' "',, .. ,.1 "'1" ·"'i,r .. ,I I ·· '·"" ~'t. ' " .... 1- ,,'

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App. C-2

~n •. ,' 1" 1 .

834

- ,.~ •. , ;'1 ':4 "I!(.

TRANER SMITH & CO" P.S. 110 JAMES STREET. SUITE 106 EDMONDS. W./ISHl NGTON 980;10

ORAD mWDALL 152 lRD AVENUE S. "IO} EDMONDS. WA 98020

11,1 .. 1 •• 1.11 ..... 1.111 ... , .• 111

App. C-3 835

C~\Jtion: rorlT\'., ~')'U\\e(.' tnj lH \':1lhlf\ AC10be 1\C.:ob:H ;,HOUlICt!' In~y '~OII1)eeIIRS Of slat~ t<-1Xtog tlgenl':/

Sp"c.t.caliu,,!; . WI'~"l1$"';J Acrobal ::.., PIOdUCiS . unCh,~ck Ihe "Sllr.nk oversized pages 10 paper Sill:'" <lNl llncheck II.e 'E,p,1"d ,".:,11 IJ;1\Jes 10 paper S17(;' opliuns In Ih~ A(iObe "flrinl- dlalo~ When uSing ,\001),11

G.x ;!ncllrllel 1.,)fn(iur.1S ~· ? ,-:=. IOI)S select ~ NonE!·· III 1/)(,' ·J..>~1ge SC,Jlrtu;( ~,CreClI0f) 00)" I/l lhp. Aefobe uPrin' " ell'llng

CLlr::NT'S COPl'

App_ C-4 836

Tax Return Carryovers to 2010 flAt.I'· BR/\D BEDDALL

(\I,~",X '.",; fph~\"; $\' r'illl, '\'.:"';\'; el;1

r---.----+---------.-------------------------- -------+----+--r----------__ ~ 1040 ~OL C/O FROM 2009

6251 ~J-IT NOt., C 10 FHON 2009 I----t--

1040 528.749.

1040 4,184,7G7.

----------------- ------1- -+-1---------

--------+--------- -------------- -- ----f---. - --.-+--+---.-----

1-------1------- - -------------- ----- ---l-----+--t----.------i

--- ---- --~-------~------------ ---!-----+---r--t--------i

~·-·---+--------------------------·t----- --l--~-----------

------r-----------------------t--

- - ----1------------------- _.- - - --·-i--------l:---l--f---------j

'------- ------- -------.-----------\-----!---+-+------------i

,-----1---------------- ---------+----~- --~--I-----------

I-------+----------------------------r----~~-+-_r----------~

1--.----1-----------------.- --- - .-- -' - - - --+----;--1--- - - ------

r----

r------~--------------------------.--.~----~--_+--r_----------

~=r===------- --~--t~==-=.:-~-= b--=±=----- --;'-7--

1 -+-t----------------l

-------------I------t---------- - - --.-------- -- -- ----- - ·-t--------I----+--f- --------l

, . ', .. I '"' " ~';'

App. C-5 837

Two-Year Comparison Worksheet 2009 """11'-0"-11-'.-"--'-",-,.,·-,, -0.'-·.·7"",,,'-,·------·---BRAD S£DDALL

,.- ----.-------~-

OfSC';,,:;(r. I., 'leu hrl'ul Inc l ('~~(' 2008 2009 ~OtcfnH'.

fSCHEDULE B TAX ,'.. OLE INn:R£sT 1 ':l . 55 J. I_ 241 . - 8. J1 0 . SCIl . Cle feZ (BUSrNESS HlCDM£ . LOSS! ·82 . 280. - 17 . 728. 64.558. 'rAXAOLE IRA D I S'f'H l nUT 1 m!~; O. 52 . 827. 52.827. SCHEDULE E ( HHn.:':J ;~:D r .~SS1'!'I!()(jGIII ·25 3.5n . . '1 . 190.15 .1. -3.936.631.

'rOT,\1. INCOME 320.257. · 4.147.813 . ·3.827.5%.

PEt-l,\LTY ON ~Il 'l'H DH,\\·I,; L or SA':, NGS '1 . 17), . O. . 4 . ,72. '1'0'1'111... . b,DJUST1·IEtIT' ; 4. 1 'f 2 . O. 4. l 72.

AD,lUSl'F.D Gnoss ,HeOtH' 32'1.429. -'.I4'1.8i3. -1.8?'3.31]~.

MEDICAL ~ND D£NT .:"' i- EXPENSF:S 89.0 '15. 18.7.20. 70 .115 ~.

'l'AXl::S 5.459 . 5 .5'~6. l19. INTEREST \ DEl111C'\' t I3L~ I 12.191. 18.734 . 6.':>4).

T01';\I, fTEMIZEf) Df.DUC"!()NS l<J6.'I2S. 42,')32. 64.193.

r NC014I : BI::FOHE £;(I,NP'l'lONS !

.j H.1 54. ·4.190,345. - ) • 'J 59 . 19 l . PERSON.r.1. r::< F-MFT! ONS 1.000. 3.650. - J. ]50.

TAXA8L;;: tNCCMC -438,154. ·4,19),995. 3. ·}5S.841.

ESTIHATF.D TAX P';Yt18NTS 12.950. O. 12.9~,() .

'fOTAI. Pj\YIH,NTS 12.950. O. '12 .9 50.

rAX OVcRPAll) 12.950. O. . ) 2.950. AMOUNT Rt:fUNDEO 12.950. O. -l/. .9,)O .

I I 1 I

I I

I

... ------ l~ I -

App. C-6 838

TRAN!::!! SN 1'1'11 i.. C()., ? <;. CeL·ti( ied Publ ic AceolJ",.''');::;

110 James Streec, Suite ;05. Edn.o;!(i:;. \-1.1; 98020 tel: 425.640.8650 [a~: 425.640.86SS

.June 7 ?010

flrad Beddall 152 3rd Avenue S, nOl Edmonds. WA 98020

Dear Brad:

Enclos(!d 15 your 2009 income CLl" ret~lnl.

Specific filing instruction~ ar~ 09 foJ Jows.

fEDERAL lNCO"!:: TAX RETURN:

1'hi!i return has been prepareci tor electronic filing and the practitioner PIN program IIa5 been elected. If you wish co have your return transmitted electt'onicall'l to the IRS, please sign and return Form 6879 to our office. We will then submit your electron ic return to the iR~. Do not mai 1 c.he paper copy of the r,.,turn to the TRS. Heturn federal Porm 8879 to uS by October 15. ~OIO.

No payment is required.

FORM 1045 APPLICATION fOR TENTATIVE KEFUNn:

Mai I your applic~tion for tentative =er~nd on or beto~e December ]1. 2010:

LJepartmcnt ot Lhe 'f,"e6SClrV Incernal Re'/enue Service Cel'ltet­Fr~sno, CA 9]888-0002

Forer, 10-15 should be si,g!iCU "nc\ r."t;ec by VOl!.

App, C-7 839

Your copy of the return is enclosed for' your EileR , We sugge!'it that YUI) retilin this copy indefinitely,

Si ncer'ely,

Kenm!t.h G, Smi lh CP;"

App. C-8 ~40

Ple~ared lor

PrepMcd by

AnlOUtH of ta;\(

Olrc'p;>ymnnt

Make check payabl" to

M."lil ti)x (eIUn, and cloeck (it applic;Joln) 10

2009 TAX RETURN FILING INSTRUCTIONS

FOR THE YEAH ENOING

DecernbEe'- J, _ 2C109

Brad Bendall 152 3rd ."'.venue :::i. ~IOI ~dmond~ . WA 98020

~-------------- ---

p s. lID Jam.:s S[l"":I.. S~Ii.tt= iOl; Edmonds . \~ashin9lon 9il020

No pmt:. ::: eqll ired'

',llsr.,/Ilra"..;::n, .. UO·;.iltOr' :­

C'i-d'!./r'l I.') t'~H' e~11" ""' Ie'd f .. ·

-Relulld~o hl ; ':"Lj

Not applicable

Ci o o

()

o o

'!'his (ctll["n has been prepared [ c-r elec[rollic filing and the pract j tioner PIN program has been elect ed. To have it r..ransmitted f::!Lecl CO !")i CA] ly, ~iyn and rl-:tllt"1l FaCtH 8H'J9 to our office _ \':e ,,· ill then sU[lmi[ ·:ou~ elec['-onic ,·et urn to tlt e IRS.

R~,el-lI-(l-) ,ccl)c-,'s""'I'I):-::"--!I------ - - - --------------- --- -

~a~':~~~-'--r'~ Ret '-1':-n Spcc;a l Iflslruction-:;

~---

{,I, , ': v

I S . 2010.

App. C-9 841

PrepJrect for

Prepo,,, d Uy I _1i

MaillaA return to

Relum must be mailed Oil Of before

)

TAX RETURN FILING INSTRUCTIONS

FOP.11 ! 04:·

Brad BeCdi\ll

FOR THE YEAR ENDING

Oecemll"r 31. 2009

152 ird Avenue S. MJOl Sdmond~. w~ 98020

'!'t"i.lr\ ·:.:r' ~m~t:h (. (00. P.S. LID Jam~c Slrc8l. Suite lOG Edmonds . Washin9lon 98020

[I.::pari;m(-~lIt oi ;.he '!'!-eilsIJry lrl:. EI- ~ai ;tevel\\lf~ Se~'!ic~ Cellter Frc~no . ~~ 93888 0002

r::ecernbe:' 31, 20)0

-------,-,- ~,---

-----l--- - ----- --------Spec.al tnst(uctions Form 10Q5 should b~ signed ~nd dilted by you_

A :efund of 51.196.431 has been requested.

App, C-IO 842

TRANER SMITH' CO" P.S. Certified Pub! ic AccountanLs

110 James st~eet, Suite 10& , Edmonds. ~~ 98020 tel: 425.640.86)0 t~~: j25.640.~~5S

PH IVACY POLlCY

CPAs, like all providecs of personal financial service!";, are now requi.red by law to infOl'ln their cl i"lllt; of theil' pol ir.ies regarding privacy of client info~mation. CPA~ have been Hnd continue to be bound by prolessiollal standards o( cont iacnt iality that. OIre e'/cn more !it I' ingenl than those requi !"ed by law, 'I'hen:!foce , \ole ha'/(· altv"ays pro .. eCl\HJ your right to prtvacy,

TYPES Of NONPUBLIC PERSONA!. lNFORMNT'T(')N viE COLLECT

we collect nonpubllc personal l:lfo:'mc!llon ilbolll: you Lllat is either provided to us by you or obtained by us with your authorization.

PART lES '1'0 WIIOI~ WJ,; 01 SCI,OSE INFOIlHATION

for current and former clients . we do not di~close any nonplIblic personal information oht~ined in the course of OUT

practice except as required or permitted by law. Permitted disclosures include. for inst.ance, providing i.nfol"rtlat ion to our employees and, in limited situatior.s. to unrel.ated third parties who need co know that info~mation [0 assist. us in (H'uviding services to you, Tn all .such situaticr.s, WP' stress the confidenlial nature of infonnatiofl !>",in,] shared ,

PROTECTING THE CONFrnENTl~L1TY AND SECURITY OF CURRENT AND rOIUiER eLlEN1'!;' I NFOHHAT lOt,:

lye rctain !'ecords relating to pt'Of ... ",;1ollal se::-vice;; t.~lIt we provide so chat Wf' arc bet t'"" <lbl e co "~S i s: you '",i th your pr"o(e~;siulldl Tlced~ and. in SOI"(~ Cd"e::;. 1.0 comply ·.nUI pt""oEession(lJ gl,ddelines. In o:'dc! t.O \)lliHd Y0l;,( nonpublic personal information . "-'€ maintdln pl:ysical . ;:lectronir., and procedural safegu(lrds tholt cOIO"l',' ~;i(.h Clur r,rollO!'<iiona!. stand.,r'd:; .

PleaSE< call if you have iHl)' qu(~stior.>;. bec ':,uzt: you!'" privilcy. ol)r profef.;sional ethic:~;. IIn<1 ;;he abil i.ty ,-() prnvl{le you '"i 1. 11 qual i ty f inilncial services ar," ven' ImpOl'ti\fI( L0 lI!;.

App. C-ll 843

8879 {h:ollt'."»'t~ , j,

~nft~jl;)qlt?:"'!; > -,, ,t :,: ,"j

H,·it~tl(_ -;t'~~:. r1l~. , i, ~

:J;.t:t~P:&'1~{ F.j,~m~'.~~:~~~Pl - f~'< l ,'r..~l J3t~h~.Y ~,::'i ', }:

1"lW;~$.{.."Wt !H ,{I V N

,!,~~~ O-;\:j;f :,;j~. ~W' tl~

r il.,(p~r ~ P~N, eh¢C~ ($\1~ k<..H= Vi':ttr

L~ 1~,~V~4n;.·

IRS e-me Signature Authorization .- D~ '~~ f~:! S'C-n.y lo ~he mo. 1».:,. t$ MOl.;'\: Hn, 'f£l\Jtrt

" jIi:~~{~p ~b$ ~&m hH rOtH i ()<-:;~)~ U:~ . Set "ft%kM<h¢ftj , 2009

t wt4 -~j~~' !'<1'}' i'i'iJ ;1'$ 3h', ~)-i "~~, !ot1f ~ 4 • .l-~ 1b;~ '<I¥t"JH~*,,:W't r~ t!'~C(m;:f r!}~ rtH$p C r.t"t"i, -N",-" iit" th~~¥ <* thj:t ..J~t ~}1~>"'>, j -(',~I' "f l','.»

?HJ :lnu .~ , 4~ r~:'"ffi j~ ~:~, v,,,:t; \~'·,,"'''<1 ~h'" f"j y~I<~~1~lfr !':l~h ~1·:1:t·Ht'>Qt'J J~; {,.:of) . ~~ ;1-1' t'¢Jt">,I)!~tl-i P,;.;i d til If<$.jp.,:;

I ~) ~ ,,,,<II t>'l .. " ;;q f,,;t l "!::,.. In, • ~:'jj.)~,. ;-, .'~\ t;,.!_ , v_"" {:.,~!~ < ,J,t':h<'.~o; ."';!) , H·.<O l ':...nH:~~ (t';> :\1h.v-1<'"; ~_,h""'~ 'I,. ~h' ~ i,, » ":fn:y~ ','"' ;IN- ';.,. .... ,h'::!<! ; >,.u "",

f-'H·t , I! )'l-' i ,'''''''; .r:!*j: ~;fn~ ~ :rW':~ . ;!)$tjj; ! ~. l'- ha, .. :!~~ , .~~!!"t ;WJ 'P,,'l-ifHJd 'll.i.s" (F' ;, ,--; ",1 \- ,'>jHfi:l:2'ftt P~~"t IH ir-,'<:h'"

~.".,-I"< ' '''> >',l . r t;,"

App. C-12

, ' .. . ~'>(; Pt !bt'~<Ht{H

844

ERO Oecl;1fat ;Qi\

lor Farm HMO, lQ4(jA, or 104(lEZ using PracHhoner PIN method

~ ((~:r ~., i(; Ii '.,,: ~ ;' H.: l 'q;,',¥"~<'_,lW'::>':, >.,. b!:,!~>' ~2v :1' t~ l~'\ ,'~ 'H, ~t'l ~ j 'in, "~I :HV . ' ~j '" "'t',),, h. 'l}.·,~j ~YJ' ~w {!';: U~ §:!')@" ~~~P*f¢;I r~ the

~:\<"~_'L; I '. y. "" } ':f~) H "\' "t;':)'; '1p~ >:a'n ~ ;;.. l-';'~$:~H_ ~ -::~t;.br.J thl;!!>~ '~':::"iT > ;H ' . -.:.:y~G:'I : ·.""": : , ~ ld; ·~0",)->",,~ ,< ,;1:.: ~;.mJ:f.n:d r-..ienttC,)\

:: EO ~"8nalHrc ! ;;''flll Sigr"J:htg tlH~ l~:I!, r1:chJrH by tH)tetH19 thy PtN be$ow .

T ,0 x fHljHtf Ol'!ci:!falil;ns

PQfWrv St8tonNmt

Consont to j)isclo5tlte r'('~'f ~"l!l 10 ,~~;'V It~·/ ;·M4~H1M}I~tH~ fi~~ ,!:(.~ PI~W. i(~i:- h {! ,M'~4L}' t>.~."UI'~ ': ' Ho."hi" -' (~{iI j ;)H~ oLk'}1 I,) '»i.W.U m'tfiHlO'frVfofHl

1( !H~ ~~'1 ·10 t~al:l~-e Hw t~~tot'd~')a !~\fJ~,$ •• 'H,(';q korr H"f:."";~' ;tC:""'")",f'?V1-..V"l.·~} ':.~~ : ~-:: ·\h;.rt M ~~w..t~~~tm 0i ~tan~~~

:'! ~{'*\'"''li'l nU~tH Jt ~ ,~.,,.F.,t!~ h~ .l'l.nr (1"=:;,:, '.' p') ~'''Q('{:'~''' .. .fa.:,~ ~."\."f f~'i:llwl qf '}~ :I'~"' :~ J.' V;: J, n;~;€': u .1 '~>( ~st~n'.",

~ ~I'ri Sj':f·h"HJ ~h~ fa" nl:Hwn -in.d E~".o;UtH~;' Fw~~tt'!. W,lh4f:<lw.>'I.l Cl:J'~6:~~~H . . :~~V{t ,1t:'4:-.. lIy '? H.~ l), ~Hy ''''1 Sq~f,St:~$i::;: ~

P~N 4-~·(~W

J tl

App. C·13 845

4868

BHM} HCDDALL

i\pplication for Automatic Extension of Time To File U.S, hHiivith,!"d\ncomo Tax Return

~ i , ,::~~ IDEi iU ~:U'~H: ·~

u n:.:JlolHC\.' due, :!):~1b~1>}C:lln,. :'

lS~ 3RD AVENUE S 11 01 EDMONDS , WA 98020

'% ·<,~". ·" " .,,,,. ,:w!{,,,· ',,:.- ,.> .. '~ >'j"'f:: "_'l"';~"" '+' ."":'

S32~ J1LO IA ur UD JO D 2UO~L2 k70

App, C-14

• ~.~:~J

SECTION 17 iii B!;: ! (H) Ci,£CTfCN UNDER REV PkOC, 2009 52

AppHcation for TentMive Refund S"'f HlIJa.Jh~·tO.t.l~t1~iJn:\o, " Do: Jl(:l.NH~ I: )Oij! l'!<. ~mi' !JI r-:!~ull'\

.. f arlir>t b:~ t~o; <~e'Jll \ , ~\a,tt t.f ;:!I\.I~

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:t!.t:p.;"l--iJ".tlii!iltl<J"Ja;~IJ'~' >IFU; '~ , >~·-t . • ·' j·"t ~~;i\I ,,)t~~,'",}j~. '): ~,' "~~

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ll't~,~1'.;"bf,¥!j.1U~A*.u1":'lO: ;""! · ·.p~~'.'I' I ; ~;" i,xfi..l.l::lc.;<;l:1.¢fJ1W'''': ~ • .I" '''> .. • ... ·,;¥"t , ·~ ~ ~* ...... ~l' ·'-'f ~.- • ••• t,~~,·R,'=".~ •

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Compo!,,!,,)" ()1 OeCIII.a1;e ,oTii!x i~!l1"hUrifl()fiiJ

Uutt.:iS 11, .. ,t ...... :.~~ ...... H ,~ ' \""~

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12 (),tth$,lJi~~

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1':; t \.~ti)1)l!tU1$: i~ m5tmtlt{)ft~ 'J

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~1.,~h. ~~ ~ l;~~fl:;rt!~~

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IS AM"'{ : """,I I,"

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R~IOl~

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App. C~15 847

Application for Tentative Refund 'Sn ~fP~I~ t t' '~H,.~tllq.~s .. o~ r::nt aUHf} tOo 'rO~! '!'}(<I'ffl.t ',H tt:Ju~<"! ma;:! It'l j '~\JP)*4U.· t1l"tthlil't'"

... fOf IlIl!!'by ~4tlmd>Jll'i, (:%:11'1:"';. , eH HlIiH.

h V~N k~.1 .< iH"",lt ~'<t-:t.~,~ 'f:;: ~4!";u:.'lif ~ftV"f,!;' "'.*,: ' ~~ ~w .'!q ~<i.;A ~f<f' <'" , >;: ,',~ 'r'!: .-.. l iff~"" h,>,q,!y w-~ t~'I';'UJf:" loP: I H~;'> •

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l { ~Mr~l ')H~S~· .>tl.,t.;~Hl.!

I? !}.l/<il:I·","

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15. r.t~;u~k R~(,t,m~ t..ot !J ~l¥l:J' 1~~"> 1 J

lti If)t;OI~~>' 'JI ~if.~ ' tn~V ,H.tj~H~! •• ~!1

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UI ~ri.n: t~>t;~ !~ H~,~ ,;

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App. C-16 848

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11 N O t, 1 ,,~.\jj ".".~ hn-........ I ~~ l; ~ f'"\. ;, :nrf,.'·,Y,ci i : f h ' / " . • ,;of ' " low ';!<,I,', '. ,

App, C-17

.2._1 __ "..;.4.;., :;..1 ::;,9.;;;.0.;., .;;.3.;..4.;;.5;,.'

0,

849

10 JJlJl t"tl~'i'UfH'; Ol~: ; II. '0;: ia

t.«nJs.tmt:nt HI hCt1111Ni

i)~ti>;JCtlO)';S Iln(fl'Y$tiU(ll'" 0:~,1'41

: ':fi'lf" -:h'~>''''' l,'j"',~j:,:U'~ " ~ j '­

'~III·"'h,r1.. ~J' .. ·1" .: !,~:. ;~,

I\."!':>. ' ... ., ~tl!f :l~ '~,:, l·

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l; ~}l>ht·,~' !, ..... :;. ,~,~ ',. ,~.

:"", ,\ .

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311.)51.

~ .----~- J..-------!

I

App. C-18 850

o/y,r::n "'1 'I'w

11(.i c(;b.~lt, ~t"*~ dfl ;~t'" r>ftt{:-;

1..,),rt1Mt:t-. ~,:,H

~----1{ )'h;.';:l'.O::,; l:~' ,: ;.::~ .,y ,-":lm"h;'n.: ~

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t. ..lI ~ ~'~.1'"'t*, h;'\:' ~ J '1".,r "tetOt~· (rt,~

tNi~ rJ~ U~~ll; ', hd1'" ~~':I1«,t .. ~i;, ~'

*;.$lt~,)t" '"

2'4 Afit~ k!i:'~ ,j;~ .y.;.{ 1:j

2~ t:~'"".,..,t'" ~ ;', ,~,..,. ~.;r-" "".

t~;:< ~"',h'·,~ !~~"" 1::' ,

1;- .s'l~h 1 .~),,~ i i.' :>~ ~, ~,~,,~ W<t M",

n

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W· ~>" ,>~ , r',:ft:f,~ 4) .:1 S~~th ~'«~ ~. ) ·t 1wrN mtf, ill 'll V", ,~,!,,~""" ~ "~""''''~ ~~ ."'<~ """"'''' .;~¥ k >'

~t>, '., ... ~~jjj> :o."'''':'o.~~ ".1'.> >~-;.,. '"

II ·~iH~' t , j H! ;'V.W ~.jj*~ k'~: 1 t

}ij C~~~::~,<, 1 ti-~ <,*~1 ~:"Jle!'~ l~ l!"

' .' ''':' i· ~l~'~<·' ~i .).1.· 'Zl <, ~M' ;;:- ili~ r, : ., ~", ;l\'~i!" JV, 4'lfHI1',! t:rj" , o .~ ~~,+,*

in",;"" U*"'~ i~I1f'~n U<4~ ~'1!·}.WH *1

:~>,I<'h.>V j.>"'''H~r·~j-»A4h'~ h.t '~ \ \\ ;

~s.~< .~r.tt>H"* ~o/y)

'1' 'l.ttC .. r.:~1~ ff lOOU f' hl)>-Sl~h" :;UO~

.. ~rf'j'M w~ ?W~l • 51 J'j ',,>0 ". 7"":\ $ ~1 !;'J~~j, hlio tOOt • S t : ,~,t}jt hI< ljld~

.. Si~'1 :icno hf. '?(hlB. f' $\ ~l) l.{llJ It~?OOl .. <i.!f,fu)!.1) tV ;>{MJ~

,,"

App. C-19 851

LL

~;lVi! '{~'; ~~J ;;, t

tit\! a),\'l~~:" ~)! . .; '1 1,)~ :!31 ,-,

~ . ,~~ .

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'ttih-:H*~j J ~'~~.

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:"~l >..,.tO~t}}j(,<}i ,> '~',d ... t ,i) .~ F·/c

:~~:t/j~~ h*t;l'

If ),Uttt,t..'sf ~.J',J~l" ~~ :Q ~~, (m,ih ,fh­

hH~~-tt _7.lb V~l~ ~ ~ t :!.'H:~ ~·~~i~'.,

~.IlI~1 lJ·

10 NOl t! tt'j$\'U ~'~<!! ~{~',~'~n<t*' ~

Ad iv5tmenl ttl H{:mil>~t!(j

nB:{hjCl~nn~ 1hl U~""tth.HJ! '; O.n~rJ

C: J~jV">!'M~ b':"" ~· ' . i ~#':':Hti1> :.k !.~~ r*~ ,:~~~, :\Jfj" ·:t;,l~ '~'~l~ ',"f,JO(\-f ~~,'~~H: ~1~ <'~',~

}:;:j ,, ! !;;Yo~llfk'" L l , .(y: ;:-:

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~ .'< i' ,j, ,~.~,:,~ ri~" , So,;,),;,"

q rIt : lHvH')l ~

\2 k} U !4V:' ~ -l;pp.,h)~ .:~Vf'l"

~ 2 ',A,/f!'(j,',+ .:dr,l';b::il" · .! ;,;u

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15 M~·fttf;Btt,A"r.;":c :.. ,;!,':~*

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tt Ht·hqUf:,,;dIJ1 .... h,i,«(i tl;ldf,)il ; 'hL' ',i> lltrj~~~~> ~F. ,,~'!~!!,t.~!or )~;;

App. C-20

{:; ; ,; (<.,. j ! .jtm ht\'h.t "9~8':H_~ I '. j!,).

i V· f ~ , · •• ' '~h : ! _:,<-< U;.:,A~.~~'fJ j SoT .tat!t.-{dm<}

., . -"< .. '"........, - _ . ............",.: .~,... - ' y '<"~ .• " +"----....:.-,"":.=";~.,;: . .,;:;'.:. .. :;l";,.. .... - ;-- __ ._ • ..-_'"';...::......:.:;.:-.::-4-_1,)_.~t_!.'''~_'_."..;.'..;.w;..;..J ... ", .. ;l: ... ~.; ..... :~;_.:;.:. ?? " ., ld .. :_ ~> ~:/ ~,<.' .:;<~. .,. .' -

, '; ,<> ~!¥t:¥. '

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bl' Ph,;'

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U';"$-"'-""~;' d;') 'Ji .f,Hihh.w ~ t~m ). ~ ~~ tM; N"¢ t'f'.

~,~ lo<_ :> '\c .... j ,.

3,; '..)\:d,J',1~*FW~ I{. iH.<tl$>..,W

JI\ '.;<n.w~~' ilk f'H';. :.t:ttl t lJi~'

'1 'Jn,,~"*~~ ,} ;jI:~: iJ 1<;' roQH';Vi:~h

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" ~~\ ~" ~ n.d"1 t" ~'>~ j,,~'l l tMil ,1:<Hhm< '4 N.,.:.~n ~.{.:j,%~ . \~0! \~$ ':-", .1\

• $U,>h'9 It\.l ~~~h! ., $rlt,.~~ ~?1< (t1f~~

.. SU1S:,t1 ! . j~ 1tfu 'i * ') en )hP b1" ?HU:;= * s.u~ yJlt leu ZW)}

• S '. !/, W.~:~ bK!~ ., $lt ~\jSf' ~il"J :?lnl~ ,.. S iSL:.(X} hIt 7tM,}t; • i l"'o{~ .. mn I$" Zott· *:;bk! ',l'!)tta"f< 'l$H

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Income

n \·tn~ ~, ~m

9t' ~ \tJ7 $.I!tt ;~;)<'JJ! r~,

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App. C-22 854

Cre<li!~

'-1 ~;'!:;~g:"~'!{:l :~<,y/) ,"Ir",~~.'>

~~, 'f*~ '1 ">:<!+t.' ''It'*''''f ,,'?..H.:' .

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l

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41 'i.>lf!! j, 1 j<l .• , .1"" I' ,; ~ "":< JQ

;1: fK'mf;~"IU~$" ;t,·,· i~; ... ~~t. ::'. ~;t;·;, k~; ) ;'U .... '1<

~ ~~>"hf' '; ~, :~ if,.} i: • . <'<,' tl't"IUj<fJ ~f~< i.>~""" .oil ;h-~i i' 0 , •

~ . f:ll" f', .. ;,. -t.",\ ').,,;,r'!; I< ;" \Jl , r (!:n~ ,,~.·~:'d,J'

4$ I4lttHt.t:i\l',. mtfhMtHH ~ .. "': ':';U.'~' !-y.,J'l t 2 ~ ';

-\1& AtI't! t.",n .. U i~>'

./G hbtl(r' H· ·,.~w ';;';"1;, 'S: {'<f : '!" ,b~;;,_>·.>:~

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51 (li,·H·"~, ."" ;,.; , ~, ,.,' 53 UHh-:!. H"' .f~.!< ~t:, ~, ~!~R ... :,.,: '.1aUQ ~ ~ ~ 1·"..:,' ~

f.a~e5 -sr U:m';lHI~ttr. ·t,O,·,V ,·~r~I~ 4', .;W,~ ~t~±:- .u t f.{~ 'I< ~"d.,,;' :$.3 AtlU,l .... jh~~ t-.<sY f4 tY;""~ . ,lh"'f jW,w.l;t(lt;.'l~<t~~iM ul.M ' ,~'~

$9 Amu +,'M,1 ~<. 't', , ~~ . ~ ,<\Ot: ;~:\,"<'!J*t ~~ I).. ~ ~'.~ . ",:

$1 )OOg ·es:,(ft.1ltf$ t,· Jl<'~','~f¢!~h,: .~1>U J:!Uo::"m ~im~~ rf{<<I"~1 ?J'!E ~~!<I ' j'\

(l.3 -lh\..t.;~ ~.'fu. ~~': ,~'~'~>1 ttn"'6w~wH~ :t-{t:li·t't' t+{~tMt A:i"!;'};)~ '~ .... !,,~tto/;'::it

\- 64' {»,".O •• eorot ttt$1IE1C) I1lhWUi ~;lllJ~ ( MU~l h"J ... -ttt. f"nl

55 AtlrMioll:~Jt.'~ 1<1+ ~ttll.st ~~fu:r.'l (' f;~n~ SJPc

Sf, R~:~i~ , j 'nl~hJ~ ·to~ldH~ ftU~ ~~.;jH~ h'lFH .~~6'). ~'~\~ ,~ •

.&1 rjil~ · N.~t ;*"'~tlH',:It v4d I A;~!. ..... ~~ f;~ ffj j !O;';.

~a

f9~l~tll;<n

~flttHrl

855

.SCHEDUlE A. (Form ;Q4Gj

;{lOG

Oen t,'ll

Paid

Itemized Deductions

SEE ST,vrSVENT I)

:;.. A .~ 1'h "~l1!V i,(~ ' ",~, tM' ~

l.J ~~ , Wj'l$j;i-l,}.j~;I.'::;' !la'd.;,. } tS,:¢ p.;ifW~\.;: , G ~::,~~'\! <'~~I '!F ;~h.''f '$ ~1-'<." vl1J(,' F ... !'; 1

~Sf;i} f.l::t tJt;Al' l

NNe. PW~CJ~~ jN~~\i::$t 11'0

tiv~

daOl:l~htw':O

,jOb ((f'Cn:"';C'$

tJrtdC~ft~m M~:'o;tta~~W~\~b

nnth.I;:!jvt~.,.

~s~~ V.)~t.' (;,. ~U :

Olhtf MfSi'"~t..~*./1!WO~$ Dedw:<.t~~~C

,'·'if','. f,"«~~V ~ ~"'{lt;,.:t ... , ~<~<.,;: --,;, ~,wp h)~$ ~ l ~;-? M"':" < ,:::,; i. ~n "" "'" "). < ~J ; '~>F~:­

~:" ;"(; (l~,~ !j,~<-, " . ~}'.' <""€:'~.?".! h:h :-;.!

~~n~1 'Hj7t'\{"', t~t-">C rl .;~l r<) ~f~ ~, " I ~ ':H !1' ~y;;e

jlOl ""~tn.I,dt-{t tQ ~~:.1 •• '};\ r ;'!.Hj~ H .. ~S n !hl)(t , , ;~ I\")e f,,~t ·"':"'·l ~11~ >,;:))1'2 "i>tt: p~~,<. ,; ; Y'{! ~,'I:{' " tj~t t*~CA «. t"<tml_

Z:J 't.}H+'~. t"'a~:~j"'<:, ;· '*.,(,::~,'(. ,,.. ·1 ". "\;':. h··~ .,'~.;' ~~l;J. . · .. l{ ~>~~,~ . Pi! ,'l''t,j 4·t'5.,.~t: ..

App. C-24

42 n.

856

\tl'i:Y!ot~h~~+'!'t B:tr1t1< "" ~<n-H tl~yf{" I ~~ ( -j'\'Il~';ll I ;V"f *h.", ~e,·ttK ~ !'}I' ;: n"<;;.. . ,...., ., ' ~ ~~ . ~;j .. / ; , . . ,y> ;/, k, -d ;v: , .. , "'~~H_J tu ~ ~pC .. 'jI(-' !n~f='· S 1':.'1: , OCiJ

5. ;t.,H ~"lj:'1i f~ !~.,~~;~.:t« l,1." :; ! '~t > ' lOt' lni:.~ 1" ~

tJt:l'"f \>Hf .. IO*

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v" N. '"fnr. r:' it',(~kj'~act1W~:'ln"!L1< !HY " '~"":

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!) I ~~'"I" I.h., ~.)~:l ':' ~l'·. "4·'t.< " ~JH:< l,~)n.1 : '" :!.;:--.;\, " 'Iil, C.'i1tH': ~.{I

:;:~ur.;":"~,",':.t../ I."'.,, )tl fln:t"t~>.<: ;s:'~{ 4>'I,? \~,.

;~ "iI

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h!~',' Uo ntH 1:"1htpkhJ ltv; /,.:H tlJ ~t!<'''' ~-'t;thJt,/.:<

!'y J 'f$S ~lt*f{~~! IWW;;: :>t<)f'") ~~~~'J

It i h''''~h; H H .. ' ,!o:t\~'!';H' I <;f\ "<:Irtid~ U, ~ h; JOU 1,.1,!""~ !ll,\, " ~'M .'~ ,*

'Ht<~:;.;"t'?<R~~·H.~':'·tl in ;,; b:' ;}('! \)).~., ~ "~~';:'"" H ' t,· }~. In 1< , :ll,;

~ * Oco(§ut;:tlon t.V" W'JW !nnh# ",'~hH:,l{'t;;H~<;;' ;-:'· .1

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1 }

857

SCHEOUl.E a

"".~!f·U~!U>'\ ll.(t~~·

" lls ,..) '\'~ ; . ~f. ,", · IH ~'

h~,~ !1\~> {<,<',c :'

Ord;nal}' Oiv'd¢fltls

I-401e: 11 '()i.'w"rh; ',0}0. ~)1V ~! ' ·<!,h;$<.N~!t­

,,!,\;"'~1"d'f1:f~l h ',!-':,<

{U)O

'Jrust'$

Interest and Ordin<lry DIVIdends

- -- -------,-----

--------.. _----

App. C-26 858

SCHEDULE C (Form )(}40)

Profit 01' Loss From Business dol;'" ;v~~r-j~ r(tt~t'i.n';tt

.. P;H1!t~t:irh Oi, i~~l'l! '\1."~!¥hlt-::~ . tfC .;;t'~~1.Hr r!'>'l,!st !<~t rt f %.> ~as)!l~ HHii E

.. AUJ<n h:l r :111% ¢! :O"':! .. s£~' \Hl~",( ~ ,~f>5 ~~1 Su'~CJijh' t iJ.oun H;~O!

"" ;'I'~ ;it1:f ~~<.~H,:( .. ' . .. I:'l LI.,."fI~ },,;,.~ ; " ',, '>. , ;,,~.~ , ' " ; . "I! ~~",~ , :" .

• a,:,-1!Hf' fln1 ~v.¢ft·; ; j.>' ~~~~ 1~1~" ~\(t!; !J > ':I~ ~ . ':<:: ,'to';:..; "t.;:.: :"p --

~"",\'1}11W;l br~? ~,j::n) M~ I

Lo~.1 0" 1,P"tGlIS, -•• )oi" j{jtim InW" 4st, 'tt .. I~!~' :

G:nu: lu®t 5~AII~J.!.'~ ~l<~ J HUll !'I-;, :

Oint' ~lC;a,jcIW. <ltrhtl';.m) I:f~~ l>~L";.~:1 iliit.~'!:a"'I)f,)~ ... ,~ ! .0" '.;' ~ fll,H. ·t tlo)j,W; j '~ .. r:~l" ,-,41

18 Otj"",r:~~~l~

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f~r.",;nv ~«:,\!j>.l'1$~ V\1""j':Of<t~Hkil,'~

F,d m, nJi" ~~ rwf. '-'t

*: f :1\t,l,',<'!1'< t'lf~Kfu ~~;us>'1il<. ;~; l~~~'1

g hp~ji~",::'{';: '!I(~ Un.~ '1,'¢M-'v

16 ll;!-:u'U

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11 ~kIPt()H' ~qt(l"U~ :-;,t:ti' d.l !""tf JI~ fjtJ!tt t <-'-':" ~; )

?O Ut~~ ,,'<: tt-~~~ .t,t-: ~~ifte 44~1 ): ' .. "i<-,....l'j""-it1 'll..j{~f~tl! \f. dHn \,' }<j;ftt~i:It~.~

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t 1 r~n;:.:~''<;. ~l'i i';.:'~?"I:;tf-'~i"Jn

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".'~··'l,' ~ <I., \I' 1.$';'" ff.1d(' I'

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~ j;'j(; h

,. n J Htldt! "::HI~ Uti '!H("tfctm Hl,frl i'Of 11 ~< !:. $.. . ~I'l! 'ralJt-: M: . ~ill:t.2 \fi -,. ~'#lf l) ~\P,OWfl, h.~!l '.l h~ ~!J)fl : d',j,':"'J ,},

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· ·f<·. ·" l : .... :).", L.J ift ~OI ~apMY>tOlk Rertue:::M)f' Act "ul"Ct!. S:i'P. S~~.Jt~· ~~"f.C(\lr.:~;O"~ '

i.1

App. C-39 871

- +----+ ..... - .. ,............. .=r:.-.· _ -.-.. -J...-...-.1--..-4.-------L.......-... -_-.---. ~=t_ +----.......+----4-....... ---

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~:ijot18 ~ hl1Ofm.d"~ 0" 0 ..... .01 V¢MICtcs

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-It ,-ov ~"'~*,l~ "'f"}J~~l:t"s tu \-()o11 ~~:::l'o~w1i: Ilftf ,,)~"C',t thtf 4"td.llOt)~ ~ ~-:h'¥l \:: H} Ieee It 'r"~ "~ .},!l·.~'!C~phofl tff4..,.n~lfI:~l·'j (:t', ......, .. 1 ()It t,y

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IN (ell I~J 1'1 30 i~d~tUl,,~) O*h·dJI*,*uffa,1"!o Jt"" ,~, JlUt~):tlhr

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32' ·r uta! (Matt· pc)"r~tnQtl("(jmt~A:ltHlt I.~

... ",eo ::J) lOUlffnd,l.~n;J.V~;"~) tn_ V,"",r

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40 n·. · ,> , ~ 'l ' fH~"f{? .. ~ .! .,f}t ii- lh~~'!~ " "\"!'I't< -..';\ i,! ~nu! ~~~'tn~·th:!!-- uJ.f,.l"! ,~t!"'¥~"'"" .• t<,,~ b.'w> ,mIt ~t~if"r.'I~t'"~. ,j ... !'t4

tJi~ · I"~ 1)1 tnt' ~.!'I!(~: • • ~nd ,-t.I!t·. J.J~". \f )Ntt."i/11U"" t ... +f.I't')t.""(! •

41 f)u yll4l I'\lf>!'lf ~I..-: ~'JJ(~~u'l!' ..... ~nl~ r..{~,,·'Hm·~ t'I:~~t >t\.IGI"t)l~ (.."L>U~1-Sh",t..;rt U .. ~~I

Nv1Q-~/!"",..)r~;'\~{Cl J': JII.JrJ~.JU ge: ,.t~ It!"$.. tN"V'lVlr'4J4""«~.t,;:t..~~~t;t1i'fI",·tCtf!1jflJ*<Ct1.(..!.~¥ ¥_

~ IttN..)t_.la*jOt~

".~~J;~,,,,., L:., .;b.~.:r- .;!;,!,.. I .'-;J. I .. , ______ -;---:-:;-:-:::':':'~ ~ L" L _ ~.' •

.4~ N'vhtm~~ oJ ;osts thM 0\-.\;"" n~.:~; 100000t ~ lw· \''=~!..-~~~~_-+r::.:2~:.:.::.;O:::..:. +j ___ -.... =i~. £l~§~!5.:{.l==----. -1:"""""':=:':""'-

43 .i>\lt~tj1;&'~~ ~ <..USl) tt l ';"ll.tf.<q6f'< btl'iOl'· ~'rN* l(1f)9: '.<lo!ll '?~;)~

24

App, C-40

I--·"~-' ... j~ ..

872

SchedtJie A • Net Operating Loss (NOq

'\ ~ r.r) 1~·C~le~""~.t(Ottt,~~101rnv,trJ() fJt"j:.~.11 or~~·w In..:nnfl h',k;q, n'.~~~l:1):~iI .... ! * ·tU·~ ~14'\.1 J.t_ 4 =-'''~~1 .)'" .. -.: ":.f!-". '.:f·Uer ~~ • .::~.l1:t f"':"''':.' " M'~ •• ~ ~>' ! , 'n+. !:"!:l' "f ~i~e ~~~~!:1:!(

~~~~'..I<Ul)t'f. t."',- ()lot': tk:<hlQt,..fi(",j:t\ ::e. ~<"!'H' ,'\'f'lO ~'l?"!'Uf/oQl~ ::'f ~,/"I' ? f lot>!'>t''"!,ft;r.!>o~ :- .11)(1.1:11il~t.~., I)t':~" .. t;''I'(t~.1. "~ 'Enbr;).~.) ,,0-;.,11 '!oJ: '~vt:ll'~'

J N~«NrAl'\t:':x~!~.'19w\NS t1&~!hf)t...l r,,"~litt ~ : 1:0 Y'. ~'!"'':td)l\ l~ '1 "-"~(""'#,,j:" 'f Jct\o@.," ~ .vqf- tn;lf1 1M",,':; tv'>I'tl !t ..f ,jJ~~.·I>\ .. ~ t"'L<!~ ',t$~ 'J~':Pi $'f

l: ",,"- 'i ~ i'lA.ti'~ ~h .. y) I),!', .. \""~~I I' ;; .,:~,~~~.·t:...'" I { 'ttl" +,*",,"t -:"I~t r1 ....... ~ ...... '-'-_._-_._--1 "h,)rtf.~tf~;:q U~h1l'\'r,. !~t~ "~S:!t~U(f'a,

J'itlt~~HSl"t~'$ :f\(;t...t"'l:y tlH\,,> It'l.!l,\'' f~W:it 'J.!~\t­

f.'~ ~.rt'lJ·ttOtl~t{ 60.06S a ..!.,(t.j tr~~I.'~ ~ . ..l~ .. J ..

"9 H 4(1""!t ,~~ $·I~'f.' lh.,J<\ ,.! .... : ~, ... nl~ tf.,.. "t<I!"~"I1';':"-!" .• tl"'):'t .·:~~·,.. ','1'" "s Hl I! fu,. ~~ I'. Y''':,fi- H~n ~'u-ii-!' tl~!f" PI" :;.:1,.1""'%"

nl l ,,:'".'.r;''' ~$"J"·'f !} lh/ l Pu !\1I1 tlHUn 1·K)t~

tt,.,o '~II4.!:J l' ~~,-:.nl'~;·'~ ~M4\ll:"1 ,.~~~~ ' tt"Uflj t~t ",,*.1\ t ''!-liN

11 t1-~,! ll •• :);~ i",;'tHt~1J ~jtr.} , \''1''~rn'' I fI:~ :,.\10 tu ~~>s.~

'PC~!c ,...t , t ·W ..t.s.r~s~

13 ">':<1<.' Iu~" 10 ~'";\l 14 Sv,<.{ .. acf~ t l'r&,thllt II U~'nl\tJ~~ ;""""1 iJ

'15 "~~i~ I~.J AUf"; H

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l1 ~f~\ \4'02 e%t.~ "In'(f'i\'\'\ i~Ill • .#"'fft.~

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'!~'."..(:~I~f'-:W:II-"l~:

?Q lfl~t" iUf~tttOtl~n1"',)W\!? 1!:} ... ~·H.J~ at,!", •• A!.-'*'.~h ~ ~"'.":":4' _.~._, C,

1 I 'u tull1' itt.·, H'uH~ ~t!~} ,I''ll'' h~ ~.,\l'/>' th~ H<tltt~ ....... t .. ,*}. r · "~ . • t !J.1 "

22. ~tt*(.wt~mlOflomh;~ . ti'~ "::>1.~ :,,: h ~ , ':< ;'\"'" f}

o.

~ (k"I~;4--':1~;~j:~ ..... ltOtt..1l..b-~(j~"t ·hU1 V '" t ~ f~:-t\ :{.:"J. t:!>lC ' ... ~ .. Jt ". ~t 1., .• tl.~:H 1\1,.0 t"l_ '!-.H

"24 t>f\lt ~f!"'ii(p!~·iM"'i~f~()1f·N:l'· I ,; ..... .. l·~I,:f It·~.,t'~ .. t\ .. ~ "'''~.··I

2$ NOL. C~ .. tfll,ItjV h-KotC- 1 ~, I 7' ~I 10f '\ U-u("· .... ttt ~ J U Ul;,:f ht1Jl41" .. ~)~ "'" .•. ~ dr. v~ )(.0\0'

.' , HP v;>""\

App. C-41

4.190 345.

0.

873

Alternative Tax Net Operating loss Worksheet ~""~J1I)':>I~,";:"j!:l''f\,I'r ... - ._ ... _-'-. :~ ... ....

BRAn BCDDi\!~L _____ ..... , _ .. _ .... _ ... _ .. _ . _. ___________ ~

18J I\'~', ~ ~ 'W"'I~.< .. · ,- ..ft •• <> . . ..

• c, "':. ~ '.p-: ". :., ~ ~'vl '. ~'i .• t.

1M tflj!,-'*t"'''<'<I~WI';f~'A

t6~ t '1": ,i~~k ;~I"ht'l: ...... ~tI'U ~<;~ :~1.,:., t"'-!'.

n~';ltI: t:11!.t-~ (f\I)':IS In,'Il.' fftv hC~

tt) n'j!kft'N:~)' 1::.1011.» 1J'lI-M1\ f;:\ld~W ~':(f>Ull

. rl\Jll·;~ tlthO.' "Ol~:'!.u~~;j

. t, ",

o.

36. 'j5'!..:

60,DGIL

1---_ ........ _ .. -

(')0.068.

26

App. C-42

1.650.

o.

1-------5,578.

~.I.l"!""" ,.

4,19J.995,

!i.: utI.

<I. 184. "67 '

874

o z

........ ......•........ _------

. ;_. __ ._-------'4 ....

--;_._..,..., ... --.--..,. _ ... - ~

.- ._--_._----_ .

--~-- .-... ----.:.

~~.6i~~'1 ~ tn . .. . ..... '" ", "" " r+'t j l

l'"""':"-;--i-~:---.----· - -- .-- ------------H

App. C-43 875

-'" ,J ii ~ 0 ~ 5 ~J

App. C-44 876

Ejec~ion to C.'rrybdck Net Operittirt9 Loss

I>r~d 8~r.lda 11 152 )ed Av~nuc S. #lUI Edmonds, WA 980;:0

'l'axpay(!, Idel'lt j f iel' t i on Number:

For thQ Ye.~ Ending Dacarnb~r ll. 2D09

arad Bedd.dl hereby e)(,CL!l to apply Sec . l'12 (oi(lHI;I under Heventie f'n)Cedllre 2009 ::.;2 to c<lrrybocl< ""y NOt.. incurred foe the t ax year ended Dc{:cmoer H. 20Q9, The t.axpayer i .G not It ,'ARP recipient nQc. in 20ne or 2()(l9 . an affiliate of a TARP recipient. 'l'he .NOt.. carryback pat'i.od selected is 5 preceding yeaJ.'s.

App. C-45 877

ElecLign to CDmbine Renta! Renl Est.c. Interests Into One '\<::tivity FU:')lUdllt, u, !Re Sec 469!c}(7)(A)

Br ad 8~dd" II 152 3rd A"'.Il\J1t $, #101 £dmcmciii>, \'iA 9S0l0

, I S. , ~009

Grad lledcialJ hei'eby' eleccs", purS~II;rlt to IRe Sec. 469(cl(7HAI, to corubin~ a 1) nillltA 1 rea I estate tau:~nzst!~i (It(! one act: i vi ty. For th taf( year ending Dec~moor :n. 2009.131:30 oedrl.:dl ",as i) qU<llifyinq tax-payer as def.ined by tRC Sec. 46'](c}('7)(R).

App. C-46 878

BR)'P BEDDALL

STA1'EMEI>IT 1 ----~--.-.- .... -.--..... - .. ---------------

TAXPAY£H IS E!A2C'l'ING"'0 AP?Vi SEC'TrOH 1;'2'!};'.:!.H , UNDER REV. PROC. .1.0 (J 'I S:i.

TAXf'AYi;;h IS NOT A TARI' HI::CJPJEN~' NQR. IN 200& Of( ,01)9, AN AFF'lL1A1'E Olt A 'fAR? RE:C!?!'EN'!'.

29

App. C-47

S'j'ATSMENT(S) 1

879

FORM 1040 !>OCT At S!~r:UF I TV ngm:F: TS WORKSHEET STNI'EMENT 2 ................••...... , ..•...... ---------........ - ...... -.-.-~--- -----.. --•........ ---------

CHECK ONLY Or-ll·; 130)(: X A. SINGLE. H~A[) OF HOUSEHOLD. oR QUAUVY!NG wI!)OWfERl

n. MARl< J eo !"I L 11>1(; JOWTLY C. HARK! i':n fYI.. INC SE.PARAl't:I..Y ANO Ll/£f) W! 'l'1l YOUR SPOUSE

AT A.t'lY TIME DURING 20011 11. KARRJED FIt INC SEPARATELY ANI) L PlED AP1\RT FHDM '/OUR SPOUSE:

fOR AI,L OF "009

1. £'N1'!i:R '!'HE 'rOTA!.. AMOUN';' fROM !:lOX S OF ALL YOUR FORMS SSP.· 1099 MID !UHl- 1.099. ALS0 . ENTF.R TH!.s AMDUNT ON FORM 1 04U. UNE 'lOA. . • . . . . .

1 jo' YOU CHEC~ ED EOX B ! T.AxP,WER AHOVWl' SPQUSE ,\J»OUNT .

:J . f.:NTER ONI:: HAl.F OF l.fNE ! . . . . . . ... ;>. hOD THE A,MOUNTS ON PORM 1040. L!N£~ 7. BU, 9;\, 1U 'rHRU 14.

)$8, 16B, 11 THRU 1.9. 21 .\NO SCHEOULE 8. LINE: 2. 00 NOT INCLUDE: ANY AMOONTS f'ROM 1;\0)1 5 OF fORMS $5/<·;1099 OR flRB· IO'}9

<1 • ENTeR THE Al1QUN'l' 01'- ANY EXCLUS tONS FROM font:IGN I~ARNEj) !N'=OME. FOkEIGN HOUSING. INCOME fROM U.S. POSSESSIONS. OR INCOME FROM PUERTO RICO I'lY BONA FIDI': RESrol~NTS OF f>U£R'rO filC'O 'l'HhT YOU CL.!>.lMen . . . . . • . . • . . . .

S. AVO LIN£$ 2. 1. ANI) 4 •. ....... " , .. 6. ADD TUE AMOUNTS ON FORM l{l40. I.INES 23 'tHROUGH LINE 3a.

AND Al4Y WR ITE .. IN ADJtJS'J'$!EN'I'S You E:N'n:RSO ON THE: OO'l'TPD L1NEN];:),'$' 'ro t..INE 3~, .. . . . .. . . • • .

1, StJDTRACT LINE I) FROM LINE S . • ..••••••••• a. EN'fER: U5.00l) il" yQtl CHECKED sox A O!( D, OR

. $ 32.000 If YOU CHECKED BOX B. OR s· (1- U' YOU CI-ili:CK1W BOX C. • • •. ....

9. I:;; THE A1-fOtJN'l' ON LINE II L£S S THAN 'Ttl J; I'.MOlJN'l' ON LINE "1? PO NO. S'l'OP" !-lONE OF YOUR SOCIAL SF.CUU"I'Y fll;;NlH·'1'l'S Mk: TAXA!31,a. SNflW: Q. ON PORN 1:;40, liNE :'lOa. 11" YOU .,\HF.: MA1l.!HF.:O. flLING SEPARATELY Ai'll) ',01; i.,l Vi::D APART fROM YOUR. SPOUSE FOR ALL Of '-009. Elf': SORE '('Jll tN'fER£!! . D' '1'0 THE R!ClI"l'OF 'tHE WO!{O "RENEFlTS" ON LINE 20A. l I YES. SUBTRACT LINE a fROM LI Nt "1 • • • " . • •

ilL i~N'I"e:R $9. COO IF YOU C!lt;O.EO HOX ;, OR D. SLLOI)(l I F YOU CHE(;KEI) .. ox t,\

$. () • 1 r 'fOU CIIEC)(ED eo>: c .. .. .... . 11. BU8TRACT LINE 10 FROM L[NE 9. :r zeRO DR LESS . ENTER U 12. ENTER 'rHE SM,1\LLEH 01" Ll!'lF. 9 OH U Nt:: 1(1 l~. ENTER ONE HALf Of LINE 12. . 14. EN'ren 'i'Hf: SMI\LLBH OF LiNE '2 OR L! Nl-: 1} 15. HUisl PLY LINE 11 BY as'l i 8S), IV LINE 11 is ZERO. ENTER 0 16. ADD \,lNES 14 MID 15 .. 17. MULTIPl"Y LINE! 3Y S5'l i .8Si . , . • .

1 a. 'fj\X.~!ilLF. BI':Nr:n TS . ENTER Tin: SMAf,f.ER or- UNE Hi OR [. (Nt: J 7 • ALSO EN1'£R TH IS AMOUNT ON FOR~I 10" (). 1.11'4£ ::loa

30

App. C-48

.. 4.147.6lJ.

1,130 . 0'12.

25,000.

o.

Q.

880

ORAD BEDDALL

= ... -==== .. ===== FOR.M lD4() 1 RA DIS'!'/( {BUTtONS S'l'A'l'EM£Nl'

....... __ .. _-----------CROSS

DtSTRIBUTfON TAXABLE AMOHN,)'

PRONTSEt{ BANK 52.827 . 52.B27.

TOTAl.. TO POR .... 1040 . L.INE15 52.B21. 52.821. ==~"""""=-$.= ............... .

= '"mo:!'''~'''''

SThTEMENT 4 ----- .....• _-_._ ....................... _ .. __ . DESCH 1 f"J' 1 ON

AU'!'O Ll(.'F.NSE BOAT LICENSE

,..

AMOUNT

235. a9g .

1.1n.

= SCH£DtJLE A POHI'I'S NOT REPORT!.':D ON PORM l09!l 5

DESCRlt>1'JON

REFINANCE FOIN'!'S REl"!NANCE

'TOTAL '1'0 ~CHEl)\JL£ A. LINE J 2

SCIH':OUL£ A

DESCR I i'1' I ON

PRF.SCRJ 1"1' lON MI!:DICJNF.S AND ,:>rUGS EY~GLASS£S AND CONTACT S nOC'l'ol1s. DfNTtS'I'S. £1"C. MEDICARE PREMHmS WITHHELD SELf lU'lP!.OYEO HeALTH INSURANCE

TO'\'AL TO SCHEDULE A. I ... INE 1

0.\'1'£ R!:­FrNJlNCk:.O

1t/01l98 1)3/21109

31

MOR'!', 'PO'tAL PER10!) lI.M(}lt'lTZAT JON POIN'l'~ IMOS , 'NIl S YEAR

2.500. 360 1.6S6. 5,113. 360 1]0.

MOON1'

9 .84 1. Jl

1,97;1, 2.852. L5HL

18.220. -.. - ...... -.-"'" .... = ...... =~=

S'f'ATBMCN1'( 5 i } , ,;. 5, 6

App. C-49 88J

=====-==,,,, .. ,,,,. ="""" .. ""' ..... ""' __ =="".,,=······· •....... _"',·.c.·."""' ... = · ...... =· .......... ,·==o=====~===_"'.="""''''''''''::='''=-='''.====== SCHEDULE E OTHER EXPENSES

DESCRT?TtoH

HOME OWNI-:RS !JUts AMOJ('I'TZA'l'HlN

1'01'AL 1'0. SCHf::r>UC£ 1';. h\G£ 1, !.. TNI': 1 a

HF:SIDEN'['f.;I_ RENT!\!. 'i13a ELH - 58l) ELI1 S1' EDt40t~OS, WA

o~:scn H>'!'101>!

AHORTIZ~'l'lON

'r<YrAL TO SCHEDULe Po . PACE 1, L! ME Ul

FORM

selt F: p}

scPo E p}

RIi:CONCILfATlON FO? REAL ES1'Nl'~ PftOl't::SSlONAI .. S

OESCIU PT I ON

R£SlDIiN'l'll\l, REI'l1'AI..-vIEW RIDGE :no ELM 51' .202 £VER. WA RE:S HJt;~rr J /It. RENTA L S e B ELM 52 B £tM Sf £DHOtlDS> 'itA

TOT,>,,, TO SCHEDULE S. LiNF 43

App. C-50

S1'i\ 'fEMEN'J' 7

"MOUN'!'

::!, '171 . H.

2,7S2.

6

AMOUN1"

46).

S'l'A'l'EMENT

·4.2S7.

':1, no. ·1.3,367 >

882

App. C-Sl 883

7R~NER SMITH & CO" P.S. HI) JAMr.S S'l'R££'I'. SU I'I'E 106 EPMONDS. WASHINGTON 98020

MAO a"OOALt, iS2 3RO ;"VENUE $, HOl ~OHONOS. WA 980~O

11.1 •• 1, ,1.1 1, •••• 1, III .... , .111

App. C-S2 884

Caution: r<}"l1!i pnnloo itt"" wnl"" Melle A<:toll;)! \->fUUue!S may flOt H_I !t:lS 0< stale \3.""g age'lcy speCj1tC~ln)I1" WIUlO 1t!\"'9 A"oO;!! 5 ~ PIQ\J\,,;t,. un<;Io<.'CiI tile 'Sh,utk vv(!rs,ze(! p.,~ .. to pa~t Sil"- :~l(i

\IIICtle<:~ I1w 1:'~Ptlf1d "lUau i';'\)~'" HJPiJlJ(~' ~'H" "I'I'O"S,.t Ih()I\do,')c 'P"nl" (ji/lf'19 . When usmgAcrobat {i" .}nd Idh:t prcxJt-fl;Jti q:1: •• ?H~. ~~.:k!cr 'Nolie' I~I lh~ "P4igc &:;:ilJ1IQ' sCI<.:~CltCIl hox rtl the AuctHf »Prl')1" (i!atQ~

CL1ENT'S C:O("y

App. C-53 885

Tax Return Carryovers to 2010

.. ;'"'1111', Sl ~t'.1ilt~1.. Cihl ~"'U~(" ~

j;..1..;:..O...;;.4 O;;......._+~..;,'O_L_C.;;..;j 2._1_~ H_o~-1.Q.°l _ .. _ ........ ........ w·. _ k~1 ');/ 8 .-L~2.J ~T I!

~'_" _-_-w._-tI ___ !·_·O_L __ '~_'_O_F_RO_M_2._0_D_9_' ._ ... -_-_.-_-_-_-_ •. -_=~~~~~-:-.1' .•. :1 W '" ' - - .......... - -- ___ 1 __ _

--------4---.--------------w-----... ---.-.-----------.. -+-------r--~--_t_------------1--- ...... _j-- _ ........ - .... .. ~--- -

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I-~--+.--.. -.-... . .. , .. ----.--.-... --.. -... -.-.-- ... -.----;----;-.. - --------1 -------.---+----+--+--+-----------

1-':'---+---'- ------- -.---- - -------t------!--;---+-------l

.~---.- -- -- ----- .. -.-... ----- - .-----... -.. -.-.+.-----l!---tl---------l

-------~-----!---l--- I I -~---------------.~---l.-___ r-i~-rr~--... _m.! f

~--.-' ---j .. -I--!--._. __ .. _--_ ..... _. __ ~ ___ ._ . __ _

----l--~ .. ~. =--~.=----~ ~ .~j .. ~ =r=:H-=---==

~---I----_.-_-~=--~~~1;.~;d ,\A' 1,.'"

App. C-54 886

Two-Year Comparison Worksheet ~~~',ur.ni!llf.ll1-BRAD ti E.O!)t,!.l. 16i'iiir.;..", 51"'''' S !NCL£ ~tI!\MI~'II·"~<1 0.0\

SC BOl,J Cll. elc £Z II;lOSINESS INCOMEil.OSSJ rAXAOI,~: .!RA Uls'nusu'rrONS

CHEDtJLB E (REIII'I'AI. IUIO PAS!'THHOUGllJ 'm'rAL INCOME

SNAt:fY ON WiTHDRAWAl" Of SAVfNGS 'rOTA£.. AOJtJ5TMt::Nl"S

DJUSTED GROSS INCOME.

"EDICA!, ANI) DEN'l"A!. EX?ENSeS fAxes lW1'F;RES'I' (OEO.ucrUH .. E)

TOTAL LTE.,lzeo oe:OI)C1'lONS

INCOMF: atfOltI!: EXEMPTIONS .£RSONAL .EXEMPTIONS

-rAXAIU.« INCOH£

STIMATEO 'fAX PAYMENTS TO'I'AL PAYMENTS

.. )

62.286. o.

<l5Lsn. );10.257.

q . 172. ••. II t,

31.4.429.

89.015. 5.459.

12.191 . 106. '1::/ 5.

-Ol.lS4. 7. 000,

-4)8. 154 .

lZ,!)SO . 12.9S0.

12,9!:tO. 12. 9S0.

\

I

'2009

S, )[0 ·1 ·17, 'I2a. 64,S58.\ 52.s:;n. 52,lin.!

4.190.1)3. ,L9]6 .6 JLi 4.147,013.1 827,')56.

I

0'1 ·1.17 i ' a. . 1 . 1 '} 2 .

4.14'l.611. l.B2L334.

18.220. 70,85';. 5. SilL 119,

18.114 ' G, ;43. -ll. 532. 64. t'13.

4 .1~O. 345. J . '/5'1 . l. 91-J, 6S0. L JSQ,

-4.193.99':>, ). '/S5 ,841.

O. 12.950. O. 12,9S0.

Q. 12. 9S0, (,I , Il. 950,

l.....--~~--. _____ l_· --l-_~

App. C-55

887

I

1'R~N£R S}!l Til [. CO" P - S • Certified Public ACcountants

110 James St.reet. Suite 10&. ~~dmonds, WI, 9!lO7.0 teL 425.640.86S0 fax' 425.640.86'.)5

.rune'? 2010

Brad Beddall 1')2 hd Avaoue S. #l 01 Edmonds WA 98020

specific filing instructign5 are 8S follows.

FF;IJERA" INCOME TAl( RF'J'l1RN

This return hus beet! prepared (or ~lactcoflic filing and til!'! practitiol1er PHI ?t'ogralll has been e l ectod. !f you ",il1M VI hav~ your return transmitted electronically to tbe fRS. pleAse sign and return Porm 887' to our office. We will then ,submit your elecc ['on Ie return to the lltS, Do not mail the paper copy of the return to the lI~S. Return federal Form jlt'l'?9to us by Oct.oller 15. i!()lO.

No payment is re.(~\.Iirl1!d.

fOOM 1045

Mai l vOile apv1 icat 10:1 for tenrd\:ive t'efunc: on or bo:(ore oecuwber Jl. JOlO;

Nai I to Depa(tmen~ of (he fredsury Interlla! Re/Emut!? Set'v1ce Ct:nLer' rrel>tic. C,\ ?386S -000:>'

A rehlod of $1. t96 4.1.3 has be>en ~eq\Jested.

App. C-56 888

Your copy 0' the relurn is enclosed for yuur files. we suggetil lhd~ you retain this copy indefinitely.

Kermeth G. SmtUl C?.t ..

L. App. C-57 889

2009 TAX RETURN FILING INSTRUCTIONS

u' S' 1 NtiT VI DU.i,\!, 1 NCOME TAX !{£TURN

fOR THE YEAR 'ENDINC

DeCtlmtuH 31 . 200') .".'". ,,, ·1 ~--- . Brau Hedda. t l 152 In:l Av~nue S. #1\)1 Edmonds, WA S8C20 - ,-------- -,--------------~--

Prepa.ed by •

' ,-- ----'----_._,---------

Amo'tnl 01 101"

Ovorpilyrtlent

Ml'fk~ elleck payable 10

M .. i l tax rlltytn afld check (it apptic:lt)le) \"

'l'rAn~r 51~ith r. Cc., f' $ , 110 ,](I"'(;!~ Stni1~t., SUiL.,. l()i,; EdmondR. WashingL0n ~8020

!,'::$$ '·;ht ~""r·jS ;j~R.: C.~ , --tNl.

P"~,#, ~'~>(f'-'l:;' ;t!',I\ '1!;."1;-m~~.

No prllt. required"

o o iJ

- ------ ....... , . --,-_ ..... _------------ -----------Mt"'Cftn;~,,~,~ r)011"t,*,",~~

t,;'e(.l'.'"-<"ft ttl ':f'Wl' ~~fll,~~fqt1 c~~

HCh;I)(I!"t111) IW

Not; appl icabh

o o o

This return l1as been prepared for /tlectronio:: tiling- and the' practitionerPl'N program has been elecced. Te> have it. trM1~, .. "t\:ed electronically, !'dgl'1 and return I' o,m S8'19 co our office . ~e will then submit your electroni c teturn to the I~S ,

~'i:nlfst he ---.-¥ ....... ~.¥¥.------.-.--... --.------ -.-.--.. ~ .. -.-.. -.- ... ___ ... ~ .... _ .. A_._._._. ___ ¥ _ ___ .. _ •• _ _ _ _

tn.~tit\!d on or bcHOt'1l

SIMtCi!>1 InStrucli()/\!>

Return feder.d fO;'1ll Pe79 LO u;; by Oeca}.)e:; 1 ':\ , ~010.

App. C-58 890

Prepared r OJ

TAX RETURN FILING INSTRUCTIONS FORM 1045 . ~pp~rCATIO" FOR TBNTATIVE K~FUND

6r<.10 lle<Jdal)

FOR HiE YEAR ENOING

December 3f. 2000

1S 2 Jrd Avenue S, nOt Edmonds, w)\ 98020

~-----+- - ------ - _._-.-.. -._-.,..-------,.._._-_ .. __ ._----Tr~net Smith & Co .. P.S. 11.0 J.lIIlE)'S Strl'!et . Suice 106 Edmonds . w",shillQtOrl 90020

--.-... -.. ---+~--------------:-'----~----------"""""-Mil'! lax tctun\ to

s~eiilll InsltUcti<lns

llepan:ment of the 7'n~il$Ury Intern",l Ihivl.!uue Service Center Fresno . CA 93686 0002

Yorm 1~4S should b~ signed .and dat~q. by you,

/< retuno of $1.196.4)) h"s been requested.

App. C~59 891

TRhNER SMITH & CO" P,$, Ce~tlfied Publjc Accountants

llC James Street, Suite )0(., }:dmonos, WA 98020 lei: 425,640 E6S0 fax: 425.640.8655

CP.l\s, like 31.1 p.o~~t:ler5 01. personal financial services. are now required by l&w to inform thei ( cl ient::; of. their poLicies regarding prlv~c! of cl ient information, CPA. hove b~en and continue ~() Pe bound by prort'»,.iQn"l sti>odards of conf \t;!ent. i il t ity ( h,)[ dre ellen more !>t.I'inqerH: than t.hose requi red by low, '\'i:pr~f ore. w"'! hnve a h .. ays protected your right to prIV3~! ,

'l'YPESOP fJONC'UBLfC PFRSONAI. fNt'O!(MATfQlII WI:: COLL£t'!'

We collect. nonpubLic person .. } in(Ormdt iOn <~!)Out YOU that is either provided to us by :;o!) 0:' obtained by us ,<lith you, authorization.

f'ARTrc:s 1'0 WHOM WE DISCL.OSE JNE'ORHATION

For:- current and forme. clienls. ~e d.o not disclo$~ ilIt\y fl<:mpublic personal information obtained in the course of out: presctlce 4Ixeept as t"Quired or .p!innitt~d by lal¥. i'Clt'mitted di8clo~mrcs inc:lude. tor inst,mce . providing information to our employees Clnd , in Jimit$d sicuations, to unrelat.ed third parties who need to know chat information to assist 1.1.$ in pt'oviding $Crvices to yOtl, in all such situations, we stress the confidentirll I\dlure of inform/Hion bel.nq ~hared.

l:'ROTEC'I'rNG 'rilE COi4F'TOENTlALJ:TY AND SE:CUIUTY OF CURReNT ANfl FCIU1£1~ CLH:wrs' HiF'ORMATIOtl

"Ie retain (ocorcls rt!lating to professiona l services chat we provide so thi\C W'l are belter abie co <lsslst yo,t with yOl:r prof essiona I nerds iHlI.l, in some: C"'!ies, to comply wi t h proh;!ti~ional guidelines, 1n order (,0 gUOIrd you:; !lonpublic personal inf<ltOl,)t ion. we miilil1ttli.l l physical, ~luctronic, and fJrQc~d\lrdl sJJft.'9uards t'1AI: coulply w.ith our proC<lssional standards .

please cal t i f ~'O" hollve ""Y 'J",€'5t ion • hacaur;<! YOIH" Dri 'lucy. Oll r pr.o! ass 1 ani. I at h i cc. <lnd the rtb j it, y to prov irl!! YO;J wi f.!1 Quality fj,tHHlci..r,' lI",rvl':f!'; are 'Je<y mpnn:o;lnt U> '11'l

App. C-60 892

8879 IRS e-file Signature Authorization Ort1:~h~tll+J1 U'h: J'~I~J. .. 00 f$fit ~,~,t\e: tns. lhls.~~nQt U fill' reaut". tl~i"lU~Ht\. ,,,"I;,), ....... ~,l(t5 .,. K~ef) Ih1S hxm f",,~ 'fO~ uu::Otft!J-, ~ U\:fbutttan~ .. 2009 ____________ L-______ ___

915018 • 15780 o

\'#',t' ~\.:! ft I ,to" ,,> .:~". t~. ::.~ .. JI ;: .. ;,;: I~!tl:~ ~~~;:,~I· ~ ~~~; .. ~_t .. }:~'. :~, ; . .'!:~~ ~.~f~:~~ttt t~:.~:.I~:~ ~~~t:lt~.~::~.;. ,~~:;::~::~~:<.~~::II~f~:':~':~:~~; ,:;f:.~,:;~ ,Hh ..... ;.'.;; ,I",'! ~ ~,".¥)~·~~~/;' •• t,," '" ' .. :', 0\1, >"f'~ .. <~ucJ.i=,' ; .- •. 't'~ \.f<l hV,; ";."'~<;;·l<.~··... ' ..... j bt': .• : '''h: '}';.>JJ'I.,!!.1i !fI!l} . II'>' MIt. ,'1\ !):I~!~H ~~.

f ~h !K~1 .• : ,;' , : 111.,', • , i:"f VI"1 .>; ,< t. ~t!~ ~ "'.at",! I, " ~>(!'.p.1 Wit'" ,'ta'f '?' t"~. {l3t·"Hj,fl~·';J'l.·!" I 4"1: '''umj .ll!· d ~(I tlw t~JStl: 1 It->

,H", f:,-tl'~ ... *t.> •• " •• a ib-:: '. - .... p.: t: Hit • ~ ft>. ' ~ ',ti, '~~Id II .,:,'~'h~";;1~, l ~tr1""£.'t ~ ~ s. r··~.n.If. ,ICY! :~ .... ~"'!...,-.I{lt .. 1tI!'~:UY"I(~ 'A~ "1PlliV-11t JI' ~Cft ~.t.~ "*4~ f>. It ~ .• ••• • l •• j '!t'f" r... )0- ;r,~J !t t~ ·w:c ... ~ ~~~ 1I1.~.!tN ~l F"~~jJ'" ~~Jf,..:p: .. ')Y.~Jf~ t~ ~hflt;';ltttJ1'8ItJf'tI""'ifttt4'''~ l)~tlt~rtlf'l:l4 I''''f :~ " .:M: • ,fl! '-.''111/.11 ••• ' .'" \. ~ ~ 'J ~',; ..i' ", ~~,\ ,: .~ • . ~'I~~ \~ • : "'~"';' \,":t~":': •• }""lh'l ~ ',~"lillltlJr41 ~rl> <~.#~:·l~<N.r. Jp,.,,! :.yknu,r f.-:'d; >;d.·tit l:."r:'m,:;; ,t~!if: . '!l- ~. ~'''!i''I N ::-'. : . . ~~: ···:;.t-;~"';WI.~.r-) ~"'~Sf'.~,.~):<.~tt:~1 ,< ·~ ~p~~ f:t ' ,".,j,u,;: jl,)It:f"l~m' · M If<:fVtWtf\'if 1llt tU'l "f·ld .. ~ ..l~tl <,f~ *t1~, ·.fr,~,rl. • f~... r~'. t ~',~" £"':")5 Jf\.1"8 ""lll.:J'I!~""Ht ,~}Af~I~~t< ,d",11 ky~tt,J,fl t! ~~ tjl\$of t .l ttkS::t; rl< \J S. ltt..'..lWt~·'qtJ~w..u. Aijent II' I.:f~~"'k;~ ,!.,y'll(n . .;.~ .... · " .... ~ : :. HI ;" .~}$. ·.·:t.· n . ..,S. !.<~U".: f~\-':;'$J.~.·'!f t'm Z: '~J;.~: !l+"~ 1.1 . ••• 1 ~1!"'~'::~,.~Ut~'N iOtM U~~~~.'d.~U~t~''1·I.',t»l->.'' I· ~"""<. ~~ ", h/." ,t, . ~c:a ~"f "l ,,~.t.~ I"',ttf.t-tt+r."'t').t?:rl ·..f~*'· f?t"~ ~J.<#O\,·j~~1 UJ'f-'; ;<'\t~Ct""I.(<O'~i ll,~.JtUmlhUl) iVI"'~,Jl'W: ld 3,>~')' J~ • .l\J,im,t:.."'t. • -: • " " .. ,' ·1 ~r ..... lI;1. .. 'H"'ft'l t~H'-'t' .'I(Nt:,:""~ Ill.r·~ ;J"'t\.)·;' '; .... ;1·!:to;;;-~~¥ ·l .... ~ttf.~ .. ftt»f~· ... ~ t,~1(~J.lf lOt apt

,:I~ 1' _1..) ... tt~ r ,~ .. ... ) '~k .. 'f "'~ I .... ... ,::.. ." .. t A :h f."',,",!t't"I;-,J! l';;r.;t¥; ~tll

l1Q ", .. ,"''''._ TRANER SM 1. 'l'H 6. CO., P ,._5_, ___ _ Etu5 "1,1 ftt m,u~

iJ$ fUV 'f>9taWta~' m~ fQ.t. ~ ... «i' ~ 1~~H;'ttlC' ... i lrtwt t!tt1Jli~ ~." t(J¥pm . . . r¥~} f~fl ~,J~) f~ ,"'V(P1."'.M it*'f "!11101 ~h",r(!il: Ot~ .~ ... {a.,. 4'Va, ~ P.i~ChCJ~"~ /Y.'li.t~uli! 'tl .. teHJ~' (.tJ¥t..k. tt"S 00_ 0f1ty4VUU...Mt! \",,~tngyc.i. O~

,~ Jtlt"'~ Ufu""~f'lff",\.41~Jf .. !~.t.Cl~ Putnwtnod. l"thf\Oft1!U..1t.t t'~e.**~Vl hl~iI\.·

j J ,\ .... H ' .... It~~ '.:'. r~ ., .... lU"" f,'tr .. H .. ' .t(+, ,~ • •• ..,. ·,-t.!I ::0~} ~fi:~:f>'f"~ltt tJ.:(J ~":()j~ 1,1. t ::l tJ>r" I ~J-w.(tI. ~1'f11'll tdh on .. .,,, .(h) ,til!. "".',"Ut)"Q ytX# ~'U V\H OH'* .... ~n , ...... ":,., ,.,,.,.,, ~4 -" 'I t'= .~ f"~.~· ~,t ... ~t'"lf' Ptlf p¥l~)~.: Ht>J:' :,f:~J tThl~ ('vr~~'.t P.Bt Ut fr.e*O~"

---- ._.-_ .... ------ -------- 0..", II> ________ _

Practitioner PIN Method Returns Only - continue below

f~sr1. III r . Cer1.d'Cah!)1'I ~nU AUlh~.'\I~aliOi):- p;oohlio~,~!~ Melh~o Grll)' ":======-=== ___ . • (.-ltt~',. InHt. tn,," ,U~~tt IlIltl"'$IrE' ..... ;H ,. J~'. pit t l'w.h ,'t 1"", ~.l'~:Vt~ tTW H~ Ml .tt:II ?009 di~ltl)~;.,1Il~' ltl.la ~UC,)d~ ;,) .. l-tld.l~ fty I1\n IA..l~'«,VI"! 1.!.t, ........ ,l':f.J ;u .......... · l~.hfW ~:~~ 1 .. '10' hltt< .t;.,,,; :t·? ~<: .• ::. ·· >·l':.!~l :';~"'i ;,.~~';. ~V: :l'';t..~~~·~~t~;.J ;1% ~i\..:..H;~~ ('tj~; r-!1~'f~~ .~.i...; "lJl'l!te.\H()~l fW. H."lf'Wt)t,;t)k ~Cf "\,'{nGf}l:" O'tS ."'It-< Pt~t"rh"'l" p, ~'<+l ·".<.f~tt ~,;t ht;;;· ''-'\',J ; ,~~ ~'''~f~

"""" ... J!. 6_1_0_, n o_1_o __ _

ERO Mus! Retain Thl$ Form .. See Instructions Do Nul Submit Tn,s Form 10 ttl 1: IRS Unless Rtlqw~l~ 1 () Do So

App. C-61 893

~ . ~' .~ '. '; ".,

........ -... ------:f;;-;:y;;;-WO;;;:;9-;e:-... Ii:;:le:-;J~"::-f<l::..\J:rO";$:-C:::-I;::O=$:-u= .. -=c------------­tor fo. f), H.lAO, I040A, Of l04l>EZ using PrJCI,\ionf!r PIN melhlXl

_____ .... ____ ___\"!;ti2O'!"!;I.t:a~~~!!I':'t:tt()(\iSf~J~9P~,lhctf=a.;.w:;iJ;:!J.i _.~ ________ _

ERO Oecl.lrat;o"

\,"llriu .... tW it.t: .. ~h~t.' j1'h ;) ,.'Y!.#·'I~; ... IN 1 ,. '':'!::..:' • I d-:C.J..H" 1'. " II~ tf.r~ •• ,'''\,;' .. ~j ,,-O"I.'''~t''l;, 'f. 11.,;,.. ~'>'JhJ(~. l<lt •• IVft\ ~ *<:fCt,hf,ldf

101h.}.l (.oo .. I.k1N"" 1<'1: ll.....: j t\·,,':;.. ;;.'1 .... ' •. : ;" W"~ I,-t· !~: ,~ ~: '- '. :'tt5'''''JT'/~' .; ~ f"l ~, "l.~l"'!n t~·, ''-''''1(1 P"-!(Mlt" ,~t.~folrf'\ hl,n°t'-

~~eft ltv' '1,~"': j~,.,l,~~,·t !, 1,·:·.,1, ..... ; ,·"n's" jW;II.,"\ 1>\ ·l·~, ,:\ : '.f! •• ~I'" Jl' .i~· 'J» t"'<. ~!~"}p"."1!,,~ 1",,(1).1'1 a, a'\"'I~~t' p!S~ 1.9"'('N";'>f.

' trtU¥...-<l' u-'-': 1-1".r1.MI*'i~v! n=*~:* I"· , .' " I' .t 1 '.,t .. "1"'" .. " . "II'J , ,~"*~ ....... '*" ~ ,~. < ~~ i~~ "le 1l~1>-~.>J j"', "HVW:'f~..g~1t ~Iltff l~lt~.1

tt~\lt{J. " t::-C«f!..~1 .Jftl:1;;:':$~li ...... l~ :,'I'!" •• ~,..,.,'jlft::",.,t.,' " t"-"".:" ~r:"l*}t~';h" ·:"><i,I;I~.,"'!"tAH_l_j'{)'·~

ERO S'9J'UIUf1t I am Sigltll'IQ ttlls TaJ( AcJum by etll1!fing my PIN b~f"w .

T 3lttl"Yot( Oecilll'ahons P('fll,l<Y .Statement th\Mf tW'-ik'f'4, lJ1 JJ"'~ •• I .:::, •• ~I:~!<:" *n..;"' II'.~ ~ ... . ~. "'" ~ ........ , a " .... ~~ ,;'l'~h,..); ,,' .::-1'- .'f'..',~~·\jt.;fI""""I.) $1.g~I:~I!'"Wij1ttd ~h~ml!fl1i,

"'1Uit Ie Rh t\».~1 JI Hh ."'~ ·,i.o'!.."~!tt ,I:". ! !~t,..~ l "'t ~~. .... -f - } l HU .:t-;r.'IJf:~I'"

Consenl 100isc!o$U!¢ f ~rY. t.a ftUO'.~. "'l' **HJ,t~* ... ,:ti,,), 't S'"-ll' •• t_~ f'ttU.l(Jlbf. ;',~f'I'\t""'I~t: " .. (:1 i:h>ChOth~ Af!h~'" 0tO(i"'l.)t{JlIl:no~ ~u :tcnc- ~ mv J~!t\JInqQwl to UlS"at'O to I'.~~ 'U~'. t~"I.h';"'~ "Ut~~I.O· 1 ~h.H tW$ h ~"::;IId'O\WA".J'*~~m 0 ' sur,ft*p';JI ,n..:lCQn tUr -l~t@"c;.hQO at kaHfO,"",sSI()fl:

at'c:~ oa"ut 3f ,..,,~r.,n t?~ i)l'V.,: 4Cl.l;l" ~ ':')IN:~~.'t'" l\'\.¥ ~~hj.1A GI t!b1Uf\(l. ~ ~~ ,,_tt 6f .).~~.,. 101,,1\0

1_ aI~ U\J$ t". flI<:1"''' "'''' ~"""" ~"N$~ w.u."'_I;n~"""t. ~ """"'''''''~.I>y ......... ''''3...,. Sc!f·s.."'"l PIN btiOw. ' . . --'-----------~--..",.;..., .•.. --.-.-•... -.. -----"'---

--_. __ .. __ .. _ •.............. _----_._._-_._ ..... _._ .... _ ••.. _ .. _._._ .. _--

App. C~62 894

BRAD BEboAL1. 152 3RD AVE~l£ S. ~lQI EDMONDS. WA 9S~20

5 : >."'fI t'~'ld I:~.t ."""~I~.

~ U~'i)t'\~t,:tJ..,~,·~f~!\,.t; ,~Ij

9

o. ... "L::'"

. " -"

895

SECTION l nH! Ii 1 )( H) ELECT roN mJDER REV FRoe 2009 S2

Application for Tentative Refund $ec '$~n''''t ,"lhuthGn'S: .... ~ b~L f:t,atFt kt r~ ~t\t..,m.e- I.,i 11 't<Utr!t

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App. C-70 902

1040 Label !r~ _Bct .. "" <JIiVAil" u,

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I 90

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11 t'!~" bJlll)t .•. l~·'~·:Ii.i'V,"~I~ 'i' ,~ .\t,), .. .; "'I;', '" ~.

16 :;,-<1 ~l\1t~l·l'·t ~A" ',II..Jt> ~ L ..»vl xll:~,:~\,-td r~f?'

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30 '~~Mrt! M ~'I*l J " >t;fI1PJ,~ /.1 ~l< ~~J ~ q

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App. C~71

.. IJ

10

11

12 11

IS.=::.'?L....lf!?:: -4': 1§O.153.

903

Credits

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App. C-72 904

SCHEOUL£ r. ~ F Otln 1040)

Itemized Deductions

eRAIJ BE!)OAj Medic,,1 ,HId Delllal f~pel1:;c$

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App. C-73 905

S<: PledUe A ;F<l, ..... I 0 401 ~lV. "" f' J';~ 1

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App. C-74

3

906

SCHEDULE a Interest and Ordinary Dividends . IF "I ,n 11)40/\ or H/40l

t~Q~~. ri' ~'o-~, H!'i.:{..4'1o'.f!'(I.,ll,.,u'·

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App. C-75 907

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App. C-77 909

SCHE{)ULE € (Forol H)40\' " .~,"' ¥ <~',

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App. C-84

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916

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.... < 4562 SCHEf)l)!,t E, 1 Depreciation and Amortization (Including tntorm"lion on I.islcd Property)

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App. C-86

16

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App. C·87 919

'v~ 4562 ~l'~><_' . Io' .... '",w ~.", .•

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2:l

App. C-88 920

aRAD 8EDDALL

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App. C-89 921

Schedule A • Net Operating Loss (NOL) ~-

BRAD 9!::OUALI,'

2

3 4

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i

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24 ~,E '1_ '~~Ij."'#,,»~ 1I)t I.-~., .. , ,I. ~ . ' ~: . '" ,~" ;",1-.-, 1 ..... ~"~.,,h·Jt"' tj, .... tJ}ol'

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.:utp.-t.:,. til,lt HOi. 'H1'£~,;:;.:.:z:...!...:.f:":.:.i:"",·"-..... ,u!!:,,,,;!!,,,,::.::,,:::o.:.p;';·'~'·';!;'<:C:·'::'~.j:.;t.;:·jt:.:)t::.... _____________ l.J2Sa..L._..:4~._'1:..9~·~O:.;.~l:!4~S!.;.,

App. C~90 922

Alternative Tax Net Operating Loss Worksheet R5!1!'t$I51~~ta:;~ilwn-'-- .. - .... -~ ... ~ " .. --.................... - y ••• • - ..... - ••

~aEO'~A..~~. ........ ___ . ____ ._~_

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App. C-91

2009

'L193.99).

923

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ts

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:-JOl {je •• " NO\. C",~JC""'I'>~k Wco'u_

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2006 2007

.· .. 1215,26'1

~,.\,

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i . I I .

I l' 1 j !

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t ~~::. U,)!.f! IV"lo.;W'\1 ; H~;:

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5,66:.S96. o.

I.- ,,~,.."" .... ;; ~"'y".. S21-~ . ,:~rt~~~~--~~-----------=~~~~~§§~ ____________________ ~~ ___________________________________________________ __

----'

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"' -.~~---

App, C-93 925

lll-"d G"d,~'L'l 152 3rd A~enue S. JI01 Edruand&. WA 9&020

Orad 8i;!dcLdl hltreby 01.ects t,) apply sec, i.72IbtllliH) ""0"'1' J<evenllf? P;'QcIiHiu::e :tOO'? ':>2 t.O c.1rryb1\ek .lny NOl, iucu! ted for the tax year ~nded D&cemher 31. 2009. 7h~ t4xpayer is not ~ TAR? .r.ec i. pi ell!:. O<:>Y. in 200 $ or 200 g. an i1 it i 1 iate Qf a 'f'AR P rec i pi Olit . The NOL car::ybac;k per~od selec.~ed is:' precedil'lg ye,ns.

: :

App. C-94 926

Election to Combine Ren t a l ~ca l CEtale Interests into One Activity Pursuant to iRe Sec . 469Ic)17)IAl

Bl"nd Hedda 11 fS2 J~d Avenue S . UI0! Edmonds. WA ~802u

Taxpaye~ Identification Numher:

6.(.,d UeddaJl hereby elects.pursudllt t·o rRe Sec. a9(c}('l)!A). to combine aUrent-al .['eal .estilte it'\t~:t'csta i.nto one lIC't.ivit.y .. Forth tax yeaf ending Oecemher J~ . ZOfJ9. Brad Beddall was aqua 1 ifyLnq caxpayer as. defined by lAC Sec. 469!c'(7)IB}.

App. C-95 927

FOOTNOTES ...........•.. ---.. ------_ .. _---- . __ .•. _----------

'I'l\XPAYER 1 S r:I.BCT J NO 1'0 APPLY SEC'!'lON 17 2 (B){ I) (H I UNDER RF;V. PROC, 2009 >2.

7AXPA't'F:lt IS 1'101';, TAR? RECIPlf.N'I' NOP.. IN 2006 OR 2009. ,\N AFfTLI~1'E Of A TARP RECIPIENT .

.. 29

App. C-96

51' A 1'EMF:NT ( S t 1

928

==~~==~~ .... =-========~~~~' ~,==~~~=="===,~""""""""~~""""""""==""""~.===~r.=====~~~ fORM I 040 . SOC1A.l, SF:CUR! T{ m::Nt::"f l'I'~ WORKSHEeT STATEMf;N'r 2

CHeCK ONLY ONE BOX, X A. SLNGIAL ,WAn OF HOUSEHOLD, OR QUAI,[FYING w!DOWt Ern

n. HARIU!:;!) fJ(,WG JOIN'tlY C. HARRIED ftLlNG SEPARATi::I,¥ AND LiVED :-JlTH ',OUR SPOUSP.

ATMl'l 'rIME DURING 2009 D. MARRIE;l) FlLfNG SEPA.ftA'rEL'( ANO [.lVc;o APAR1' FROM YOUR SPOUSE

FOIt ALL Of 2009

1. ENTER THE TOTAL .;.MOUNT FROM BO:~ 'J Of ,\LI. YOUR FORMS SSA 1099 ANO RIU~-1099. AL.SO. ENTER THIS A~IOUN'r ON F'OA.M J.040. LINE 20h. •• • ...•.

t F YOU CHI';CK£D l>OX 1'L TAX;>AYCP. '\NOUN1' s rous;,; ;\.N0UWt .

2 . ENTER ONE HALF OF LINE 1 . . . ...• 3. >.O!) THE AMOIJNTS ON FORM 1040. LINE i. SB. 9,\, iO 'f'!1RU 14.

15B. \6». l'1 THlHJ 19. 21 J\ND SCHEDUt.£ B. LINE 2. 00 Nm' INCIAJPE "'NY AMOUtlTSFROK BOX 5 OF' FORMS 55A 1099 OR RRB-1099

<I. £N'f£R TliE AMOUNT 01" ANY P.xCLUS10NS FROI. FOREiGN !-:ARNlm IHCOMt:. f'OHE!CN 1I0US1NO, !NCOM~ FROM u.s. POSSSSSiQNS. OR TNCOM€ !"'ROM r>O£RTO R rco ny SON ... F roE: RESIOENTS OF' PUERTO fUCO THAT YOU CLAIMeD . , , . • • . . . . . . •

S. ADD .!, ftitS 2. l. AND tj. . . . . . . • • • • , . • • • •

6. lIOO THE AMOUNTS ON I-'ORM 1040. LINES 21 TIIROlJGW LINE 32. AND N.4Y W!UTE-!N ADJUSTMENTS YOU ENTERED ON 't'I(£ DOTTED LINE NEXT 1'0 l,.HH;: 36. .. .. . • . • . . • •

i • .sUBTRAC1' LUl.lt 6 PROM LIN!> S • . • • • • • • • • • . . 6. E:N'r.eR: $15,000 If' YOU CIII;:CKED ROX A OR D. OR

$l4,OOQ If' VOU CHECKED BOX B. OR $-0- fr YOU CUECKE!) BOX C, •••..•.••

9. IS THE: AMOUNT ON LINE 8 LESS THAN Tift: AMOUNT ON I.UiE 7?

HL

IX! NO. STOl-'. flONF: O~· YOUR ~O{;rAL SECURJTY aeNtPI'I'S ARt '!'l'.XAIH.E. ENTER"O· ON FOP.I>! l()QO. Llf\l!i; 206. H' YOU ARE MARHrE'ZO ptttNG se;pAf{J\1'f.LY AN'D YOU LIVt;O APART FI'tOM YOUf{ SPOOS;I~: POll ;{.t. Of-' 2009. 0.( SURf: YOU RNTERED '0 ' '1'0 THE RTClI'r OF THF. WORO "CENEFI1'S" ON t.tN£ 20A. I I Y &S. SUBTRACT t.. nil;: S ? ROl't t..lNE 'I • • • . . • .

r:wn::R $9. COO 11" YOU CHeCKED BOX A OR I). $12.0DO IF YOU CHECKED SOx n &-0- IF YOU CHECXED BOX C . .

SUSTRACT ~rNE 10 'ROM LINE 9 .• rF ZERO OR L~SS. ~NTER 0-ENTJ::R THE SMALLEH or CHIt: 9 OR UN;; 10 t::NTJ!:R ONE HAt..F OF L. CNF. l?. fi:NTER THE: SMAL.l..t:H OF 1..1 HE 2 OR i. WE 11 MlII;rI?lN I..INE 11 fiY fjS~. !.55). IF l.rNE II IS 'l.ERO. ENTI::R 0 ADD LINES 1ft AND 15, .... I4UL'l'lPLY I..INe 1 ev 8,)\ (.8':))

is. '!',\X/\Sr..E 8ENc:flTS. f:f1TER THE SHM .. u.m Of LiNt: l6 OR I.jN~; 17 , ALSO EN'!";;:" TfHS ANOlll·1T ON ;::v?1-i 1iJ~(l. l.i:NE 2011

,Hl

App. C-97

35,46t.

1i,147.!HJ.

4,1.)O.on.

C. -4,13 0. on.

2S.00{).

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fl.

929

(o'OkM 1040 IRA UlSTRIBUTIONS STA1'EMEI'lT ---- .. _-.---------_ •... _ ..• - ...• - ............... __ .... __ ......• -NAME: OF PAYER

FKONTII':R HANK

TOTAl .. '1'0 ~'ORM lO'll'. LINE 1S

OEseR I P'I' tON

AUTO LiCENSE SCAT Ll.CENSE;

TO'tAL '1'(,) SCHEl)Ul.E A. J... Hm !l

GROSS DISTRIBUTION 'rt\x.ABL!~ il..MOUN'I'

52.827.

52. e:n.

52.ern .

'>2.827 .

A.KOUNT

235. 898,

1.1)3 .

. """""""""""=="" .. = ... ".~.=="". ==""""""''''''''''''''''''''''''''''=''''''=''''''''=''''''''''''''''====.""-====.",, •.. "" .• ... "" .......... ="" .. ""."--=""-"""-====._""==. SCHEOUL.E A

DI!:SC1'HM'lON

~otN'tS NOT R~?ORTED ON FORM 1098

TOTAL E'O.tN'l'$

STATEI'Il1:N'l'

AMORT . ?£IUOD AMO/t'['I:Z;ATION IMOS . THIS YEAR

--------. ------------------ ----- -----------REf'tNANC£ ~OW'l'S RenN.:>.NCE

TOTAL TO SCH(~OllLi~ A, ,. 11'1£ Li

1 1/lH/98 03/27/09

2.500. ~.?'J3.

!',f.DICAL AND DENTAL EXPENSES

)60 360

--- .----.-----.---------~-----------

Dt:SCRi?'rlON

?RESeR r PT roN Hr;t1 (nm:!'; AND DRUGS BYEGi../\SS£S 1\1'10 CON'I'ACTS OOCTORS. OIi:N'1' 1 51'S. ETC. HEnrCAIU; f>!U;rM UMS WITHHELD SELF"l::tWLOYED Hlt.,."vrH tNSURM1CF:

1.656. n().

1.78[, .

6

AM01JN'f

9.847. ;) ! .

1.974 . 2.852. 3.518.

18. ;220.

S'l'A'i't:m:wrl S ) :3. 4. S. 1)

App. C-98 930

BRIIOElEDDALL

SCHf::DULE f:: .- ••.•••. -::; •..... y ....•.... ---••• __ •••••••• _"' ••• .. _ .•.. _ .................. _ ... _-_ •..•...... ----

RES I DEN'f'lAt. RENTAL 'VI EW R 1 VCE 330 ELM 5T ~202 EVE~, WA

DESCllt?TroN

HOME: QWN£RS nUES AMORT 1 ZA1'lON

TOTAL 1'0 SCHt-:OULE C;, PAGE I. LIN!"; I$ ,

7

AMOUN1'

2.12L n.

2.752.

.===========~=-========-;"""=~.~ .. -. ""'-=.,,,,, .• ,,,,, ... ,",,',,,"''''''''''''''''---=-===''='= SCHEl)lJl.e r: 6 .--....... ----

DESCIH PT ro~ AMOUNT --_ ...•.. _._-AMORT r ZA'!' lON 46) .

-------""--'roTA1, TO SCI{EOUL£ E. ?A.GE 1. [.Im:: 18 46),

..... == ..... ="""'======="" .... ==="'.=-=-====-...... -= ..... -..--==-=-=--"""" ..... """..,_ .. ====."""'=.= .. _=== SCHEDULE P: I\£CCNCI I,rA1' {ON PCR REAL ESTATe PROfESSIONALS STATEMENT -----------_ ........... __ .. __ ._ .•... _ .... - ........•.• _ ...•......... _-----------PORM

SCI! I:': PI

SCI! E: 1'1

DESCRIPTION

RESIDEN'l'IAL R£.N1'Al.- VI;;:'" RIDGE :130 el.t4 ST »202 iN~lt. WJ!.. RESIDEN'rJAL H2N1·"L·S8S CUI ')86 1-:1.1-1 51 EDMONOS, wr,

. TOT~i, '1'0 SCHEI)UL£ E. L LNE 4 J

AMOUNT

-4.257.

'9,110,

13.:167. =---:;-;""-===

31 STATRHENTISI 7, e, 9

App. C-99 93J

2. t,:~t1~'m:u: ... -I H1~.It.:I.)+>·.;.t>~·~I.:L ;.,.

b le~~ JiflliM!I,t J'), Ihltl vh: ....

') t.tWCrt'itl'~

U!) firrl.-tm· tirtJil ~I>'<lj.jl ""'..:'

So r.il,,-tf;.;'w~l<;'~"liilt~·-:.

(Hilt! 1 .• ~I<c"tll..J!l:<:I~~ I,'" ~H"ll

"1 lQ.ltl$ i'a sl~,;lrulti\:'t.

e. ~'l!l>ltF J.n~'t.ll ~:.}'y "t,>.: "

OltJtf ~"Jt!::i:,lf.neq~· It· ·rn* ·

Hh alllkt~~):- .::wttl ~Hll" "" •• , ('>:1-..11< • . ~ ~

• L.~$.>O ,1'" I""*I-Ult:(j n·'~- .... t!~ ~ I 'J 0."",_ ;nse'~

I l~$ ;",.'IiJI*~tl ;t~h\O ~ "'I~

~2 Ltl\(I~;V~ 'i1 ~~flA :*H1· 1·' ,lofH '

13" hi:.*I'IiJlk ,h~>;.' .~ .. ~" ... ,> Ji."' ..... "'. tJ. l.rt~$ .J,_".;m'$t.I~V,tl .;, ~tI .~.';l> l

f" Q.;"'i~1 r,.\"", \': ~h'l

\5 !OMI.1 -",

l "lIi'oIie:t .,.G $Io,.~tQIW' EWIY 1£ ~.1"l , "'r ~ ox df$.~ 11 n,.,., p... .....~.. ~ . I I, ~ • "'tit ~ ~ :,$ 11 Q.:h~ Iota:,':rl ,,~~ + • 1"" -W""

19 td:lN:-ib~#fl:..h.Jf".~(it-1.."tA

21 C»t:~h.,~,,-.slm U.l'

21 CJjI~.ht<lV

23 AU~"""""Ifl'''''''' r;mr.~' :1, ~oa;,~ _

2S

~ Ntl th'ij!~~!'t: tklS$* Jti' iv~ \ '1 ."...",_ , ....... ,~"<, •• t .".:0 .1>. ~. ~ ..

l' , ' .1, >f'",

f ~Hm~ ... t.1 ,:t(:t)tc~'~ t$J,,~ $l"h'. ,':J< •• ... 4

Wf'kI~'lt .><, ~1': ". ¥. 'tk~ : ~ ,"" :t • ....

'1 216

Statement 7

Statement 9_

}:::~_""'~ ..... --.. ~:~:._ !) in~_~,rrt~Otd: t~~ ~t~jl~ I~!S 'f~~'ti: ~'IM I 1 ~:itkf~ tl'1 S('i1tAtlt K. :b"t:'\ 1 f;"jli,mh

I to-~ritIRl :iI; J. " • 1.t1·~f(1"t>1 ft~h'*~'~1 S _¥ ______ -_--_

!-----! i;~h~~t~\ t~.'t; ' ¥I'tl~'I ' cJ""

.t !k1~~'>.Il41~1 $. --------[. I ;;;;;i-;';';;;~7t\,ii,----- I

4 ;;;iblal' .. ::;;;t'~~ · I ~ ·.~·"""~"·~~~1'" I, .. 1: .... ~I~ r"-" ~'-""i':I':'n AnalVSIS 01 AC(lutnulMed Adjustments AeC(Ilml, Oth .... A{'jil1~t"'~nh 'A;;;;r;v--'n':-t,-a-'-.d':"""----­~uli!:!f!=:tr StIarElhofrters' Undisltlbuled Ta..able Income Previoul>l

~1.JI«:;' .f! ~'I.I~f""'.9 ~d ~,~ •. \;\1 '

(,tt4ut:U."1>1tO~I'ful:~""' .. fl 'It~·,

. _. - ~ '-lr-' ---'I"'l~""7'~P"l---.- -: ... _~._;~_,:_~.'_j;l_··_··'_{_·'_1 ~~::~_::2~":::: ~- ~--!-r __ . __ m _ _

!itatemenl,; £) t----....

(}:hr.-t t·'~jll .. 1.Ul'j.t$

C;VtH))rt •• • l !it'!. 1 !7IH; ':tt l ~

£ht,~tb.~!:.nn\ t'lil!(:' tnJ;t .1~ :i!o'ft' ... t 1":" ~A'lj ,: ..

a &,\,!ut.· .••• ~.~ tl' .::J: ~:;"t. j tt~ . , .....

~.; .,,,,, 1120S tl00$1

2008.0',;000 B<i!ddidl PropertH's. Inc . B2Gn 1

App. C~100 932

26 USC § 6'501 - Limitation.~ on assessment and collection I Title 26· lute ...

1 01'6

A80iJT u: I GET mE Lfo!N I FIND II IAW'Ii'rn I LEGAl. ENCYCLOPEDIA I Hap OllT

lise • Title 26 , Subtitle F, Chapler 66 , Subchapter A , §

6S01

26 USC § 6501 - Limitations on assessment and collection

us Code Notes Updates

Current through Pub. L. lJj.~. (See EYhJ.i5; idl)(s for thp, (llwen' h:..qnqf..~5.~.)

(a) Genera! rule

Except as othelWise provided in thi$ section, thE amcuOl of any tax imposed by this tithe shall be assessed within 3 years after the return was filed (whether or 1l0{ such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any lime

after sudl tax be.:ame due ~nd before the expiration of 3 years after the date on which an, part of stich tax WdS paid, iind no flroceeding in court wlthuut assessment for the collection of such tax shaH be begun aher the. expiration of such period. for purpo$es of this chapter, the term "return" mE!lI!1S the return requln!d to be med by the taxpayer (and does not include a return of any person from Whom the taxpayer has received an item of income, gain. loss, deduction, or c.redit).

(b) Time return deem~d med

(1) Early recurn for purposes of fI.,!s section, II return of tax imposed by this title, except tax imposed by "oapter 3. 4, 21 . or 24, filed befon! the last day prescribed by law or by regulations promulgated pursuant to law fOI the filing thereof, shall be considered as filed on

such last day.

(2) Return of (:ertain employment and wlthholdlng taxes

For purposes of this secti¢n. If a return of tax imposed by chapter 3, 4, 21, or 24 for iiHW period endIng with or within a calendar year is flied before AprH 15 of the succeeding calendar year, ~uch return shall be considered hied on April 15 of such

calendar year.

(3) Return executed by Secretary

Notwithstanding the provisions of paragraph (l) of SEction tl!)l.Q ilil.. the execution of a retu m by the Secretary pursuant to the authority conferred by such section shall not start the running of the period of limitations on assessment and (:oUectlon.

(4) Retufn?f excise taxes

For purposes of this section, the filing of a return ror a specified period on which an entry has been made with respect to a tax imposed under a provision of svbtitle D (including a return on whfcn an entry has been made shoWing no liabliity for such tax for such period) shall constitute the tiling of a. return of all amounts of such tax Which, if prop~rly p<lid, would be required to be reported 011 such neturn for such period.

Ie) Exceptions

(1) False return

In the case of a false or fraudulent mturt'I ""Hh the intent to evade tax, the tax m~y be assessed. or a proceeding in court for collection of such tax may be begun without assessment. at any time.

{Zl Willful attempt to evade tax

In case of a willful attEllltpt in any manner to defeat or evadi! tax Imposed by thts title (other than tax imposed by subtitle A or B). the tax may be assessed, or ~ proceeding in court tor the collection of stich tax may be bequn without assessment, at any time.

App. D-I

http://www.law.comeli.eduluscode!texti26/6S01

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i ...... . ........ . .i

121212013 12:i2AM

26 USC § liSOl - Liinitatiort~ on assessment and collection l Title 26 ~ Inte ...

AWUT Ul I GET rnf.' 1..f>W ! fWD A lAWYliR ! LEGAl.. ENCYClOffDIA I Hap onr

usc > Title 26. Subtitle F , Chapter 66, Subchapter A > §

6501 Pi\EVWI

26 USC § 6501 - Limitations on assessment and collection

us Code Notes Updates

Current throug h pub. l. .1...l.1"j.it. (See!'l,lb!K~LtM. current Cuo",ress.)

(a) Ceneral rule

Except as otherwise provIded In this section, the amount of any tax imposed by this HUe shaH ~ assessed "",th;n 3 years after the retufl'l was filed ('Al1eri1er or not such return was filed on or after the date prescribed) or, If the tax is payahle by,tamp, at allY time after such tax became dLtc ami before the expiration of 3 years after the date on which a I1Y part of such tax WdS paid, arld no proceeding in coun without assessment for the collection of such 'tax shall be begun after the Explration of stich period. For purposes of this chapter, the term "return" means the return required to be med by th~ taxpayer (and does not indude a return of any person from whom the taxpayer has receive<! an item of Income, gain. loss, deduction, Of credit).

(b) Time return deemed flied

(1) Early return

I'or purposes of this sectlol1, a return of tax imposed by this title, except tax imposed by chap~er 3, 4, 21, Of 24, flied before the last day prescribed by law or by regulatkll1s promulgated plii'Suallt to law for the Willg thereof, shall be conSidered as flied on

http://www.law.col11cll.eduluscode!text!26!6501

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Title 25 USC RSSf.~!l5l'i r.;w~pHl~( .. N..il!ll!ti f;tti\H~LI~Rt!Ulf1illmm:[ti~

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rm.t.~tf.~n"}. (OVt<;f onty 2(1% 'Of 'Our (J,)':.t.!>

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such IMt day. ' . ......... __ .... _ ..... .

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(2) Return of eertaln employment and wlthh(>ldlng taxes

For purposes of this section, if a return of tax imposed by chapter 3, 4, 21, or 24 for any period endlng with or Within a calendar year is flied before April 1 S of the succ¢edhlg cale.floar year, such return shaj[ be conSidered flied on April 1 S of such

ca Ie noa r year ..

en Return executed by Secretary

Notwithstanding the provisions of paragraph (2) of section 5Q.fQ (hl. the e)(Ecutlon of a return by the Secretary pursuaot to the authority con:ferred by $uch section shall not start the running of the period of limitation> on assessmi11'lt and coUec!ion,

(4) Return of excise taxes

For purposes of this section. the filing of a return for a speCified period on which al1

entry has been made with respect to a tax imposed under a provision of subHtle D {Including a rerun'> on whiCh an ~ntry has been made showing no liability for such tax (or such period) shan constitute the filing of it return of all amount> of $uch tax which, If prop~rly paid. wo(Jkl be reqlJired to be reported on such return for SIKh period.

(c) Exceptions

(li False return

III the case of a false or fraudulent return ,vith the ,ntent to evade tax. the tax may be assessed, or Ii proceeding in (Oour! fot coUeclion of such tax may be begun without assessment, at any time.

(2) Willful attempt to evade tax

In c, .. " of" willful attempt In any manner to defeat or evade tax imposed by this title (other than taX imposed by subtftle A or B), the tax may he assessed, or a proceeding ill COUIt for the collection of such tal( may be begu/1 \~ithollf assessment, at any lime,

App, E-l

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FIND A lAWYER

121212013 12:12 AM

26 USC § t)501 ;; Limitations on assessment and collection I Title 26 - lnte ...

20f6

Our IRS Tax Nightmare One .. "..,le ph<>n<> ca~ 10 1M light person sot •• ., our iRS t"" probl~rm

by INS Tax Uowyor,len St.uffengt>r. ESC! on """Tube

(3) NQ return

In the alS<i~ of failure to fi~ a ~turn, the tax may be assessed. or a proceeding In court for theco!!ectlon of SlJch tax may be begun without assessment. at any time.

(4) Ext.nsion byagrumtil1t

(A) In genual

Where, before the expiration of the time prescribed In this section for the assessment of any tax Imposed by this title, except the estate tax provided in chapter 11, both the Secretary and the taxpayer have consented In writing \0 its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed lIpon. The period so ag~ed upon may be extended by subsequent agreermmts In \WIfing made before th~ expiration of the period previously agreed upon,

(8) Notice to taxpayer of right to refuse or Umlt extension

The Secretary shall notify the taxpayer of the taxpayer's right to refuse to extend the period of limitations, or to limit such extension to particular Issues or to a particular

period of time, on .,,"" oc,asion when the taxpayer Is requested to provide such consent.

(5) Tax resulting from changes In certain Income tax or estate tax credits For spedat rutes applicable tn cases ~re the adjustment of certain taxes all~d as a credit against tncome taxes or estate taxes results In addltk>na! tax. see section ~ (>;1 (retatlng to the foreign tax credit for Income tax purpos.s) and section 2\l.iD. (relating to taxes of foreign countries, Statei. etc., dallrred as credit against estate taxes),

(S) Termlna.tlon of private foundation statu.s

in the ,asl! of a tax 011 termination of private foUndation status un~ section ~. such tal( may be assesr,\!d. or a proceeding In court for the c()Hectlon of such tal< may be. begun without assessment, at any lime.

(7) Special rule for certain amended returns

Where, within the 60-day period ending on the. day 011 wilich the time prescrlbl!d In this section for the assessment of ahy tax lmposed by sUbl:itle A fur any taxaple ~a r would othelVilise expire, the Secretary recems a written document signed by the ta)(p~yer showIng that the taxpayer owes an additlonal amount of such tax for such taxable ~ar, Ih~ period for the assessment of $\.Kh additk>nal lIlTI{)un\ shalf not expire before the day 60 days alter the day Oil which the Secretary receives su(,;h document.

(8) Fai.lure to notIfy Secretary of c.rtaln foraign transfers

(A) 1n general

In the case of any information which is required to bl;! reported 10 the Secretary pursuant to an election under section lZ.9.:i ilil or under section 122.8 ill, .(i.Q3..8, £iQ.1J!li, !.U.l.JJia; ~, ii1Mli,~, or ~, the lime for auessment of any ta~ ,mpo~ by thi!: title With respect to any tax return, eV('nt, Of period to wlllc!1 such ,nformalion relates shall not e)(pire before the date which is J years after the date on which the Secretary is furnished the informatloo required to be reported under such

sectiun.

(6) Application to faIlures due to reasonable cause

If the failure to furnish the information referred to !n subparagraph (A) is due to reasonable cause and not willful neglect, subparagraph (A) shaH apply only 10 the item or items rdaled to such faihl reo

(!:I} Gift tax on certain gifts not shown on return

If any gift of property lilt: value of which (ot any increase in taxabre gifts required under .e<tiollli:Q} (Q) which) is required to be shown on a return of tax Imposed by

chapter 12 (without regard to section 2.5.11.3 ili)), alld is not shown on such return , any tax imposed by chapter 12 011 such gift may be asse.sed, or a proceeding ill court for

App. E-2

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26 USC § hSOl ~ Linlitatlons on assessment anrl collection i Title 26 - hue ..•

30f6

the collection of such tax may be begun without ass ... ~sment, at any time, The preceding sentence shall not apply to any lIem which is di.dcosed in such retum, or in a statement attached to the return, in a manner adequate to apprise the Se<.retary (If the nature of SIKh Item.

(10) l.lsted transactions

If it taxpayer fails to Indude on any return or statement for any taxable year any

Information with respect to a listed transilction (as defin~,d in section ~ {~)Gm which Is requ ired under secHon ,§Qll to be included with such return or statement. the time for assessment of any tax imposed by this title wittt respect to such transaction shall not expire before the date which is 1 year after the earll~r of-

(A) the date on which the Secretary is furnished the information so required, or

(8) the date that a male rial advisor meets the requirements of settion ill? with respect to a request by the Secretary under section 6.lJ2 ilil relating to .uch transaction with respect to such taxpayer.

(1) Certain orders of criminal restitution

In the case of any amount described In section .&f_Ql (g.l(1). such amount may be assessed, or a proceeding in court for the collection of such amou I'll may be begun without assessment, at any time.

(d) Request for prompt assessment

Except as othen.lflse provided in subsection (c), (e), or {f), In the case of any taK (pther than the ta)( Imposed by chapter 11 of suhtitle 8, rela\in9 to estate taxes) fpT which return is required tn the case of a dec~dent, or by his Htate dur£!19 the period of administration, or by a corporation, the til)( shaH be assessed, and any proceeding in court without assessment for the collection of such tax shall be begun. within 18 months after written request therefor (flied after the return is made and filed in such manner and such form as may be prescrtbed by regulations of the Secretary) by the ~xecutl)r, administrator, or other fldudary representing the estate of such di!ceOent, or by the corporation, but not after the expiration of 3 years after Ihe return was filed. This subsectlon shaliriot apply In the elISe of a corporation unless-

(1)

(A) suchwtitten request notIfies the Secretary that the corporation cont<:mp!ates d1ssolution at or before the expiration of such 1 S-month period,

(B) the dissolution Is in good faith begun before (hi! expiration of such 1 B-nlonth

period. and

(C} the dissolution is <;omp!eted;

(2)

(A) such written request notffies the secretary that a dissolution has in good faith been begun, ahd

(8) the dissolution \s completed: or

(l) a dissolution has been completed at the time such _ltten request is ma(k

(e) Substantial omission of items

Except as othl'lrw~e provided In subsection \c)-

(1) Income taxes

In the case of any tax imposed by subtitle A-

(JIll Gerie ta.l rule

If the taxpayer omits from gross income an amQ~nt properly indudibll! therein and·-

(I) such amount is in excess of 25 percent of the amount of gross into me stated in the rewm. or

(H) such ilmount-

(I) is attributable to one or more assets with respect to which Information is required lObe reported under section ~ (or wou ld be so required if such section were apptled without re9ard to the dollar threshold specified in subsection (a) thereof and withtltlt regard to any exceptions provided pur,Uolm to subsection {h)(I) thereOf), and

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(II) is in excess of $$.000,

the tal< may be asse;sed, or a procEeding in court for (.Ollection of such tax may be begun without assessment, at any time within 6 years after the retum was fried.

is) Determination of gross Income

for purposes of subparagraph (A)-

(i) In the case of a trade or bus iness, the term "gross income" mean.s the total of the amounts received or accrued from the safe of goods Of s€rvices (if such amounts are requil1!d to be shown on l1'1e return) prior to diminution by thl! cost 01 such sales or services; and

(If) in determining the amolJnt omitted from gross income. there shal! not be taken into il<tOWlt a rlY ~mount which Is cnlltteo from gfGS$ income stated in th~ rewm if such amount Is dlsctos~d in the return, or in a statement attached to the return, jn a manner adequate to apprise the Secretary of the runure and amount of such item.

(C) Constructive dividends

If the taxpayer omits from gross Income an amount properly includible therein under section ~l. (,,1. the ta x may be assessed, or a proceeding in cou rt fer the collection of such tax may be done without assessing, at any time within 6 years after the return was Wed,

(2) Estate and gift taxU

tn the case of a return of estate tax under chapter 11 C)r a return of gift tax undN chapter 12, if the taxpayer omits from the gross estate 01 from the total amount of the gifts made during the perioe for whkh the return was filed items includible tn such gross estate or such total gifts, as the case may be; as ~xceed in amoullt 25 percent of the gross e&tati! stated in the return Of the total amount of gifts stated in the retum, the tax may be assessed, or a proceeding III COlJrt for the collection of such tax may be begun withQut aUElssment, at any time within 6 y€ars after the return was filed. In determining the items omitted from the gross estate or the telal gifts, there shalll10t be taken into account any (tem which h omitted from th!! gross estate or from the total gifts stated in the return if such Item is disclosed In the return, or in a statement atta<:hed to the return, in it manner adequate to apprise the Secretary of the nature and amount of such Item.

(3) EXCise taxes 111 the case of a return of a tax imposed under a provision of .~ubtitle D, if the return omits an amount nf slich tax. properly includible thereon whkh e)(ce~ds 25 percent of the amount of ~uch tax reported thereon, the tax may be assessed, or a pro(:eeoiog in court for the colle:ction of such tax may be begun wIthout assessment, at any time within (> years after the return is filed, In determining the amount of tax omitted on a return, there .shaU not be taken Into account any amount of tax imposed by chapter 41, 42, 43. or 44 which is omitted from the return if the transaction giving rise to such tax is disdosed in the return, or in a statement attached to the feW rn, in a manner adl!<;uate to apprise the Secretary of Ine l!x!stence and nature of ~ uch item.

(f) Personal holding <:ompany till(

If a corporation whick is a personal hokiing company fcr any taxable yeat fa Us to fik with its return under chapter 1 for such Yl!Jr a schedule setting forth~

(I) the ItEmS of gross income and adjusted ordinary gross income, described in settlon ill. receMld by the corporat\on during such year, and

(2) the names and addreues of the Individuals who owned, withi" the meanil1g of settlon 544 (relating to rules fur determln!n9 stock owners hip). at any time dUring the iast half of such year more tnan SO pen::ent in value 01 the outstanding capital stock of the <:orporation.

the persona! ho!dlng company tax for such year may be assessed, or a proceEtding in court for the (ollection of such tax may be begun without as;essment, at any time with in 6 years after the return for such ye3r was filed.

{g} Certain In<:ome tax returns of cQrporatlons

(1) Trusts or partnerships

If a taxpayer determines In good faith that it is a trust or partnership and files a return

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as such under subtitle A, and if such taxpayer is (hereaft~r held to be a corporation for the taxable year for which the return is filed, su<;h return shall be d<!emed the return of the corporation for purposes of this section.

(2) Exempt organizations

If a taxpayer determines in good faith that It is an exempt organization and fiies a return as such under section QQ3.~, arld If such taxpayer Is thereafter held to be a taxable organization for the taxable year for which the retlJrn Is filed, such return

shall be deemed the return of the o!'9anlzatiotl for purposes of this s<!ction.

mOlsc If a corporation derermfnes in good faith that it Is a DISC (as deflned in section ~ W) and mesa rettlrn as such under section M.D. {c)ill and if such (orporatlon is therea fter held to be a corporation which is not a DISC for the taxabie year for which the return is flied, such rettlrn s hall be deemed the return of a corporatiorl which ;s

not a DISC for purposes of this section.

(h) Nat of)(tratlnq lou or ca.pltal loss carry packs

It) the case of a deficiency attributable to the application to the taxpayer of a r)~t operating Joss carryback or a capital loss carryback {including deficiencies which may be assessed pursuant to the prOVisions of section 22l3. !.hlLill, such defiCicnw may be assessed at any time before the expp-ation of the period within which a defiden<.:y for the taxable year ofthe net ope rating IOSi or net capital toss whkh results in s ucil carryback

may be assessed.

(t) foreign tax carrybacks

In the ,ase of a deficiency attributable to the applk:atioo to the taxpayer of a carryback under se,tion ~1 (Q (relating to carryback and carryover of excess foreign taxes) or under section .9!'J..l ill. (relating to carryback and carryover of disallowed foreign oil and gas taxes), suth defldency may be assessed at any time before 1M expiration of one year after the explratfon of the period within Which a deficiency may be assessed for the taxable year ofttle 'tJ(ce$s taxes described in section ~ (Q or 2Qlill which result in

such <:arrybad< ..

(I) Certain credit c:arrybacks

(1) In general

tn the case of a defidency attributabltl to the application to the taxpayer of a credit carryback (induding deficienCies which may be as~essed pursuant to tnt:: provisions of section ~U {bela», such deficiency may be assessed at any time before the expiration of the period within which a deficiency for tne taxable year of the unused credit which results In such carryback may be assessed, or with respect to any portion of a credit carryback from a taxable year attributable to a net operating loss carryback, capital loss carrybat;k. or other nedlt carryback from a subsequent taxable year, at any time before the expiration of the period within wnid. a deficiency for such subsequent taxable year may be assessed.

(2) Credit carryback defined

For purposes of this subsection, the term "credit carryback" has the meaning given

such term by sectlon\1~.LL {dU'!l{Q.

(I<) Tentative carryback adjustment assessment period

In a case where an amount has been applied. credited, or refunded under section ~ (relating to tentative carryback and refund adjustments) b\-' reason of a net operating loss carryba,k, a capital Ion carryback. or a credit carryback (as defined in section iUll (dH4l!Q) to a prior taxable year, the period destribed in subsection (a) of this section for assessing a deficiency for su,h prior tuable year shall be extended to includ« the period described in subsection (h) or (j), whichever is applicable; except th.-.t the amnunt which may be usessed solely by reason of this subsection shall not exceed the amount so applied, credited, or refunded under section ttlll. reduced by any amount which may be ilssessed soleiy by reason of subsection (h) or (I). as the case may be.

(I) Special rule for chaprer 4Z and similar taxes

0) til general

For purposes of any lax imposed by section 1ill2, by chapler 42 (other than section

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26 USC § 6,(fl • Lifnitations on assessment and collection i Title 26 - [nte ...

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.4.iHQ}, or by sll<tion 49Z.!i, the return referred to in this section shall be the return flied by the private foundation. plan, trust, or other organization (as the (',15(' may be) for the year in which the act (or failure to act) giving risc to liabtllry for such tax occurred. For purposes of section ~, such return is the return filed by the private foundation for the taxable year for which the tal< is tmpos~d.

(2) Certain contrIbutions to section 50 He)l3) ofganlllltions

In the case of a deficiency of tax of a private foundation making a contribution in the manner provided in sectiem ~ 19H.:l) (relating to certain contributions to section .!ill.l t&1Gl organizations) attributable to the fa!!tm; of a se<::tiol15!l.l (Q(.1l organization to make In;': distribution prescribed by section1~.4?(gfGl. such oofkk!ncy may be assessed at any time before the expiration of one year after the expiration of the r'>eriod within which a deficiency may be assessed for the taX'lble year with respect to which the contribution was made.

(3) ee rlll]n s eet-asldes des crlbed In section 4942(9)(2)

In the case of a deficiency attributable to the failure of an amount set aside by a private foundation for a specific project to be treated as a qualifying distribution under the ptf.lvlsions of section 1M2 fo\f2l!Slilll. such defldency may be assessed at any Hme before the expiration of 2 years after the expiration of the period within whkh a defidency may be a.ses,ed for the taxable Yt'ar to whkh the amount set aside relatcs.

(m) Defklencles attributable to election or certain credits

The period for assessing a deficiency attrlbutable to any election under section .3.0!ill.(fil, . lOJ!. (hl!2}, :iOC Mm, 1QQ (g)ill, .1Q. m. 1l, ill, !tiC.lJJ.l.ill • .1.5l:! {gl, or II ill (or any revocation thereof) shall not expire before the date 1 y.!ar after the date on whk:h the Secretary is notified of such election (or revocation).

(nl Cross referenc4!s

(1) For period of' limitations for a~sessment and coUection In the case of a joint income return filed after separate returns have been filed. seE section ililLi (biU) and (4).

(2) For extension of period in the case of partnership items (as defined in section 2~;U!iill.ID, see section ~.

(3) For dedar.tory judgment relating to treatment of items other than partnership items with r<1spect to an over5heltereti reNtn. ~ce s~c!ion ~.

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31 CFR 10.29 - Conflicting interests. , Title 31 - Money and Finance: Treasury I Code of ... Page 1 of 3

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CPR > Title 31 , Subtitle A > Pan 10 ) Subpart B > Section 10.29

31 CFR 10.29 - Conflicting interests.

§ 10.29 Conflicting Interests.

(a) Except as provided by paragraph (b) of this section, a practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest. A conflict of interest exists if-

(1} The representation of one client will be directly adverse to another client: or

(2) There Is a significant risk that the representation of onl! or more dients will be materially limited by the practitioner's responsibilities to another client, a farmer client or a third person, or by a personal Interest of the practitioner.

(b) Notwithstanding tile existence of a conflict of interest under paragraph (a) of this section, th~ practitioner may represent a client If-

(1) The practltklnet reasonably believes that the practitioner will be able to provide competent and dlllgent representation to each affected client;

(2) The represetlt,aliol1 is not prohibited by law; and

(3) Each affected client waives the conflict of interest and gives informed I:.onsent, confirm<!o In writJng by. !lach~ted die nt, at the time the existence of (ne tonfhct of jntere~t is knPWr!by the practitioner, The confirmatiorl may !:te made withill a reasonable petiod after the informed consent. but in no event later than 30 days,

(c) Copies of the wriHen te>nsents must be retained by the practitioner for at least 36 mO!1ths from the date of the conclusion of the representatlo!1 of the affecred cilento;, and the written consents must be provided to any officer or employee of the Internal Revenue Service on requ est.

(d) Effectlve/appliatbility date. This section is applicable on S€ptember 26, 2QQ7.

[T.D. 9359. n FR 54549. Sept. 26, 2007]

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12/17/2013

ET Section 102 - Integrity and ObjectIvity

.01 Rule 102-lntegrity and objectivity. In the performance of any professional service. a member shall maintain objectivity and integrity. shaH be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.

[As adopted January 12, 1988.]

Interpretations under Rule 102 -integrity and Objectitll1y

.02 102-1-Knowing misrepreseni'"<ttions in the preparation of financial statements or records.

A member shan be considered to have knowingly misrepresented facts in violation of rule 102 [ET section 1Q2,Q1] when he or she knowlngly-

a. Makes. or permits or directs another to make, materially false and misleading entries in an entity's financial statements or records; Of

b. Fails to correct an entity's financial statements or records that are malerially false and misleading when he or she has the authority to record an entry; or

c. Signs, or permits or directs another to sign, a document containing materially false and misleading information.

[Revised. effective May 31, 1999, by the Professional Ethics Executive Committee.]

.03 102-2-Ctmfijcts ofinterest

A conflict ofintere$t may occur if a member performs a professional service for a client or employer and the member or his or her firm has a relationship with another person, entity, product. Of service that could, in the member's profeSsional judgment, be viewed by the Client, employer, or other appropriate parties as impairing Ihe member's objectivJty. If the member believes ihatthe professional service can be performed with objectivity, and the relationship is disclosed to and consent is obtained from such client, employer. or other appropriate parties, the rule shall not operate to prohibit the performance of the professional service. \Nhen making the disclosure, the member should consider Rule 301, Confidential Client Information [tIT section 301.01}.

Certain profe$Sional engagements, such as audits, reviews, and other attest services, require independence. Independence impairments under rule 101 { ET section t 01 .01], its interpretations; and rulings cannot be eliminated by sucn disclosure and consent.

The foUewing are examples, not all-inclusive, of situations that snould cause a member to consider whether or not the ellent, employer, or other appropriate parties could view the relationship asirnpairing the member's objectivity:

• A memberhifis been asked to perform litigation services for the plaintiff in connection with a lawsuit filed against a client of the member's firm.

• A member has provided tax or personal finanCial planning (PFP) services for a married couple who are undergoing a divorce, and the member has been asked to provide the services for both part'ies during the divorce proceedjngs.

• In connectionwfth a PFP engagement. a member plans to suggest 1hat the client invest in a business in which he or she has a financial interest.

• A member provides tax or PFP servfces for several members of a family who may have opposing interests.

• A member has a significant financial interest. is a member of management, or is in a position of influence in a company that is a major competitor of a client for which the member performs management consulting services.

• A member selVes on a city's board of tax appeals. whjch considers matters involving several of the member's tax clients.

• A member has been approached to provide services in connection with the purchase of real estate from a cHent of the member's firm.

• A member refers a PF? or tax client to an insurance broker or other service provider, which refers clients to the member under an exclusive arrangement to do so.

• A member recommends or refers a client to a service bureau in which the member or partner{s} in the member's firm hold materia! financial interest(s}.

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The above examples are not intended to be all·inclusive.

[Replaces previous interpretation 102-2, Conflicts of Interest, AUglJst 1995, effective August 31, 1995.]

.04 102·3-0bligations of iii. member to his or her employer's external accountant.

Under rule 102 [ET sectiOn 102.01). a member must maintain objectivity and integrity 1n the performance ofa professional service. In dealing with his or her employer's external accountant, a member mllst be candid and not knowingly misrepresent facts or knowingly fail to disclose material facts. This would include, for example, responding to specific inquiries for which his or her employer's extemat accountant requests written representation.

[Effective November 30, 1993.]

.05 1 02-4-SlibordtMtklrl of judgment by a member.

Rule 102 [ET section 102.01] prohibits a member from knowingly misrepresenting facts or subordinating his or her judgment when performing professional services for a client, for an employer, or on a volunteer basis. Although Rule 102 prohibits subordination of judgment to a client, this interpretation addresses differences of opinion between a member and his or her supervisor or any other person within the member's organization.

If a member and his or her supervisor or any other person within the member's organization have a difference of opinion relating to the application of accounting principles; auditing standards; or other relevant professional standards, including standards appllcable to tax and consulting services or applicable laws Of regulations, then self-interest, famUiarity, and undue influence threats 10 the member's compliance with Rule 102 may exist Accordingly. the member should apply appropriate safeguards so that the member does not subordinate his or her judgment when the member condudes the difference of opinion creates signlficanl threats to the members Integrity and objectivity.

In assessing the signlfIcance of any identified threats, the member should form a conclusion, after appropriate research or consultation, about whether the result of the posmon taken by the supervisor or other person

a. fails to comply with professional standards, when applicable; b, creates a material misrepresentation of fact; or c. may violate applicable laws or regulations.

If the member concludes that the position taken is not in comptJance with professlonaf Standards but does not result in a material misrepresentation of fact or a violation of appUcabla laws or regulations. then threats would not be considered significant. However, the member should discuss his or her conclusions with the person taking the position.

!f the member conpludes that the position results in a material misrepresentation of fact or a violation of applicable laws or regulations, then threats would be considered significant. In such circumstances. the member should discuss his or her concerns with the supervisor. If the difference of opinlon is stm not resolved, then the member should discuss his or her concerns with the approprwte higher level(s) of management within the member's organization (for example. the supervisor's immediate superior, senior management, and those charged with governance).

If after discussing such concerns with the supervisor and appropriate higher level(s) of management within the member's organization, the member concludes that appropriate action was not taken. then the member should consider, in no specific order, the following safeguards to ensure that threats to the member's compliance with Rule 102 are eHminated or reduced to an acceptable lavel:

• Determining whether any additional requirements exist under hts or her emplo~'s internal policies and procedures for reporting dffferences of opinion.

• Determirnng whether any responsibilities exist to communicate to third parties, such as regulatory aUthorities or the employer's (former employer's) external accountant In considering such communications, the member should be cognizant of his Qf her obHgatiors under Interpretation No. 501-9, "Confidentiallnformat(oo Obtained From Employment Of

Volunteer Activities," under Rule 501, Acts Discreditable [ET section 501> 10], and Interpretation No.1 02-3, "Obligations of a Member to His or Her Employer's External Accountant," under Rule 102 [ET section 102.04J.

• Consulting with his or her legal counsel regarding his or her responsibilities.

Page 2 of3

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31 CPR 240.17 " Powers of attorney. i Title 3 I - Moncy and Finance: Trea ...

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) Title 31 ) Subtitle B ) Chapter II , Sul:l<:hapter A, Part 240, Section 240.17

31 CFR 240.17 - Powers of attorney.

CFR Updates A ... thoritie~ (U.S. Code)

§ 240,17 Powers of attorney.

~gyl

N!'.XI

(a) Specific: powers of attorney. Any check may be negotiated unde r a spetifit power of attorney executed in accordance with applicable State or Federal taw after the issuance of the check and describing the check in full (check serial and symbol numbers, dale of issue, amount. and name of payee).

(b) General powers of attorney. Checks may be negotiated under a general power of

attorney executed. in accordance with applicable State or Federal law. in favor of a person for the following dasses of payments:

(l> Payments for the redemption of currencies or for principal and/or interest on U,S, securities;

(2) Payments for tax refunds, but subject to the limitations concerning the mailing of Internal R.evenue refund checks contained in 26 CFR l:i.QJ..5.QW: and

(3) Payments for 90.od5 and services.

(c> Special powers of attorney. Checks issued for classes of payments other than those specified in paragraph (b) of this section. such as a recurring benefit payment, may be negotiatw under a special power of atrorney executed in accordance with applicable State Of Federal law, which de.scribes the purpose for which the checks are issued. names a person as att6rney-'in-fact, and redtes that the special power of attorney is not given to carry into effect an assignment of the right to receive such payment, either to the attorney-in-fact or to any other person.

(d) Durable !>pe<:ial powers of attorney. A durable special power of attorney is a special power of attorney that continues despite the principal's later incompetency, and is created hy thl! prindpal's use of words expJicftly stating such Intent. Classes of checks other than those specified in paragraph (0) of this section may be negotiated under a durahle speciat power of attorney executed in accordance with applicable State or Federal !aw, which describes the purpose for which the checks are issued. names a person as attorney-In··fact, and recites that the special power of attorney is not given to carry into effect an assignment of the right to receive such payment, either to the attorney- in- fac! or to any other person. For the purpose of negotiating Treasury checks. durable special powers of attorney are effective only during the six-month period following a

determination that the named payee isincompetel'lt.

{e} Springing durable special powers of attorney. A springing durable specia.l PQwer of aHorney is similar to a durable power of attorney excep~ that its terms do not become effective until the prln.;:ipars subsequent incompetence. As with a durable special power of attorney, a springing durable special power of attorney is created by the principal's use of Language e)(plicitly stating that its terms become effectlve at such time as the principal is determined to be incompetent. Classes of checks other than those spe<:ified in paragraph (b) of this section may be negotiated under a sprlnging durable speciai power of attorney exeCllted In aC<OToance with applicable State or Federal law, which describes the purpose for which the checks are issued, names a person as attorney-

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31 CPR 240.17- Powers of attorney. I Title 31 • Money ant! Finance: Trea .. <

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in-fact, and recites that the springing durable special power of attorney is not givtfl to carry Into effect an assignment of the rignt to r~ceive payment. either to the attorney­

in-fact Of to any other persoll. For the purpose of negotiating Treasury checks, springing durable special powers of attorney are effective only during the six-month period following a determination t hat the named payee is incompetent.

(f) Proof of authority, Checks Indorsed by an attorney-in-fact must include, d'i part of the indorsement, an indi<.;ation of tn'! capacity in whh::b th~ attorney-in-fact is indorsing.

An 2xarnple would be: "John Jones by Paul Smith, attorney··· in·· fact for John Jones." Such checks when presented for payment by a financial institution, wil! be paid bv Treasury

without the submissfon of documentary proof of the claimed authority. with the understanding that evid<!nce of such daimed authority to indorse may b<! required by

Treasury in the event of a dispute,

(g} Revocation of powers of attorney. Notwithstanding any other law. for purposes of negotiating Trusury cheCKS, all powers of attorney are deemed revokf'd by the death of

the principal and may also be deemed revoked by notice from the prindpal to Iha parties known, or reasonably expected, to be acting on the power of attorney.

(h) Optional use fQrm .s . OptiOtlat use powu of attorney forms are l isted in the appendix

to this part. These forms a~ available on the fMS website at: h.\tjJJJ~tr.e.ii~"£lQvL

ww;;kd~i.m.sI .. re.m.dij,tlru:!s.J:JLI'111 ..

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26 CFR 60.1506 .. Notices to be given to recognized representative; direct..

Iof3

"'!:IOU T Ui / GET me lAW f FIND A LAWYltR I LEGAl. ENCYCLOPEDIA. i HELP OUT

CFR , Title 26, Chapter i • $ub<hapter H ) Part 601 , Subpart E. ,Section 601.506

~i

1t~XI

26 CFR 601.506 .... Notices to be given to recognized

representative; direct contact with taxpayer; delivery of a

check drawn on the United States Treasury to recognized representative.

CfR Update:. Autl1oritie~ (U.S. Code)

§ 601.506 Notices t.o be given to recognized (epr~sentatjve; direct contact with taxpayer; delivery of a check drawn on the United States Treasury to recognized representative.

{a) Gene ral. Any notice or othe r written communication (ar a wpy thereof) required or permitted to be g,ven to a taxpayu in any matter before the Internal Revenue Service must be given to the taxpayer and. unless restricted by the taxpayer, to the representative according to the following procedures·····

(1) If the taxpayer designares more than one recognized representative to receive notices and other written communications. it wiil be the practice of the Inlernal Revenue Service to .give copies of such to two (but not more than two) Individuals so designated.

(2) In a case in which the taxpayer does not deslgriate which recognized representative is to receive notices, it will be the practice of rhe Internal Revenue Service to give notices and other communications to the first recognized represenrative appointed on the power of attorney.

(3) Faiiure to give notice or other written communitatlon to th€ recognized reprcsentallve of a t<lxpaYf'.r wfl! not affect the validity of any notice or other written communication detlvered to a taxpayer.

Unless otherwise Indicated in the document. a. power of attorney olher than form 284S will be presumed to grant the authority to receive notices or other written communication (or a copy thereof) required or permltted to be given to a taxpayer in any matter(s) before thelnternal Revenue Service to which the power of attorney pertains.

{b} Cases where taxpayer may be contacted directlv. Where a recognized re presentative has unreasonably delayed or hindered an examination. coUectlon or investigation by failing to furnish . aftef repeated request. nonprlvl(eged information

necessary to the examination. coH~ction or Investigation, the Internal Revenue Service employee conducting the examination, collection or investigation may request the permission of nis/herlmmedlate supervisor to contact the taxpayer directly for such

information.

(1) Procedure. If such permission is. granted. the case file will be documented with sufficicnt facts to $ohow how the examination, (;ollection or investigation was being delayed or hindered. Written notice of such permission, briefly stating the reason why it was granted, will be given to both the recognized representative and the Taxpayer together with a request of the taxpayer to supply such nonprivi leged informatlon. (See 7521 (c) of the Internal Revenue Code and the regulations thereunderJ

(2) Effect of direct notification. Permission to by-·pass a recognized representative and contact a taxpayer directly does not automatically disqualifY an individual to act

App. I-I

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as the recognized representative of a taxpayer in a matter. Howeve r, S llch informa tion may be referred to the Director of Practice for possible disciplinary proceedings under Circular No, 230, 31 CfR part lQ.

(c) Oetivery of a check drawn on the United States Treasury- (1) General. A dU'ck drawn on the United States Treasury (e,g .. a check in payment of refund of in lerna I revenue taxes, penalties. or interest, see § !iQ1SQ4(,,1I!il) will be mailed to the recognized representative of a taxpayer provided that a power of attomey is flied containing speCific authorization for ti'lis to be dOIl€.

(2) Address of recogniZed representat[ve. The check will be mailed to the address of the recognized representative listed on the power of attorney unless such recognized representative notifies the Internal Revenue Service. in writing that hiseiher mailing address has been changed.

(3) Authorilliatlon of more than one recognh:ed representative. In the event a power of attorney authorizes more than one recognized representative to receive a check on the taxpayer's behalf, and such representatives have different addresses, the Internal Revenue Service will mail the check dlrct!y to the taxpayer, unless a statement (signed by aU ofthe recognized representa.tives so authorized) Is submitted which indicates the address to which the check Is ~o be mailed,

(4) Cases in litlglltion, The provisions of § 60),5QU(IJ concerning the issuance of a tax refund do not apply to the Issuance of a check in payment of claims which have been either reduced to judgment or settled in the COUfse (or as a result> of litigation.

(d) Centralized Authorlz:atlon File (CAF) system- (1) Information recorded onto the CAF system. Information from both powers of attorney and tax information authorizations is recorded onto the CAr: system. Such information enables Internal Revenue Service pers'onnel who do not have access ta the actual POWef of attorney or tax

information authorf~tlons to-

(i) Determine wMther a recognized representative or an appOintee is authonzedby a taxpayer to receive and/or inspect confidentlal tax information:

Hi) Determine. in the case of a recognized representative, whether that representative is authorized to perform the acts set forth in § 601,504(a); and

(iii) Send copies of computer genera.ted notices and communications to an appointee or re(o~nized representative so authorized hy the taxpayer,

(2) CAF number. A Centrallzed Aurhorization Fife (CM) number generally wit! be

issued to-

(i) A Ye(ogn[zed representative who files a power of attorney and a written

declaration of represe ntative; or

(Ii) An appoin~ authorjzed under a tax information autOOrization.

The i5suar.~e of a eM number does not indicate that a person is either recognized or authorized to practice berore (he lnternal Revenue Service. Such determination is made under the prOVisions of Circular No. 230, 31 eFR part lC . The purpose of the CAF number is to faciHtate the processing of a power of attorney or a tax informatron <lllthorization submitted by a recognized representative or an appointee. A recognized

representatiVe or an appointee should indude the same CAF number on every power of

attorney or tax information authorilation filed. HoW(\ver, because the CAF number is not a .suhstantive requirement (i.e., as listed in § 601.S03(a) l. a tax information authorization or power of attornev which does not indude $u<h number will not be rejected based on the absence of a CAF number,

(3) Ta)( matte.rs recorded on CAF. Although a power of attorney or tax information authorizaliol1 may be filed in all matters under the jurisdiction of the Internal Revenue Service, only those documents which meet each of the following criteria will be

App.1-2

MA.i<;E.A.QQ.~ATIQN CQNTRIBUTf CONTENT atQ;lME A SPONSQR GWE FEEDIIACK

5i28/2013 5:18 PM

26 CFR GO l.586 • Notices to be given to recognized representative; direcL.

recorded onto the CAf system--

(I) Specific tax period. Only documents which concern a matter(s) relating to a specific tax period will he retorded onto the CAF system, A power of attorney Of tax information authorization filed in a maHer unrelated to a specific period (e,g., the 100% penalty for faUure to pay over withholding taxes imposed by section 6672 of

the Internal Revenue Code. applications for an employer identific::ation number, and n,quest5 for a private letter ruling request pertaining to a proposed transaction} cannot be. recorded onto the CAF system,

(ill Future three-year limitation. Only docllments which concern a tax period that enels 110 later than three years after th~ dat~ on a power of attorney is received by the IMernal Revenue Service will be recorded onlO the CAF system. For exampie. a

power of attorney received by the Internal Revenu<> Servin; on August I, 1990. which i nd i(at~s that the authorization applies to form 941 for the quarter5 ended Oecembe r 31, 1990 through Detember 31. 1000, will be re,ofded onw the CAF sY$l.em for the applicable tax perlods whleh end no later than JulV 31. 1993 (Le"

tn ree years after the date of receipt. by the Internal Revenue Service),

(iii) Documents for prior tax period$. Documents wnkh concern any lax period whkh has ended prior to the date on which a power of attorney is received by the Internal Revenue ~rvice will be recorded onto the CAF system provided that matters concerning such years are under consideration by the Internal Revenue Service,

(Iv) limitation on representatives recorded onto the CAF system. No more chan three represetlta~ives appointed LInder a power of attorney or three persons designated under a tax information authorization will be recorded 00(0 the CAF system. If more than three representatives are appointed under a power of attorney or more than three persons designated under a tax information authorization, only the first three names will be recorded onto the CAr: system.

The fact that a power of attorney or tax Information authorization cannot be recorded onto the CAF system Is not determinative of the (current or future) validity of such

document. (For example, documents which concern tax periods that end more than three years from the date of receipt by the IRS are not invalid for the period{s) not recorded

onto the CAF system, but can be resubmitted at a latet date.)

[56 FR 24008, May 28, 199! 1

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ASOUT 1.11 CONTACT US AOllfRTISE HERE HELP TERMS Of USE. PRiVACY [LII ]

App.I-3 3 on 5/28/2013 5: 18 .PM

2622 Statements on Standards for Accounting and Review Services

financial statements. In such circumstances, the accountant should follow the guidance in paragraphs .25-.26.

Subsequent Events .44 Evidence or information that a suhsequent event that has a material

effed on the compiled financial statements has occurred may come to the ac­countant's attention in the following ways:

a. During the performance of compilation procedures b. Subsequent to the date of the accountant's compiIatiolll'eport but

prior to the release ot the report 8

In either case, the accountant should request that management consider the possible effects on the financial statements, including the adequacy of any ro­lated disclosure, if applicable .

• 45 If the accountant detenuines that the suhsequent event is not. ade­quately accounted for in the financial statements or disclosed in the notes, he or she should follow the guidance in paragraphs .27-···.29 .

• 46 Occasionally, a subsequent event has such a material impact on the entity that the accountant may wish to include in his or her corilpihi.tion report an explanatory paragraph directing the reader's attention to the event and its effects. Such an emphasis of matter paragraph may be added at the accountant's discretion, provided that the matter is disclosed in the financial statements. See paragraphs .25-.26 for additional guidance with respect to emphasis of matter paragraphs.

Subsequent Discovery of Facts Existing at the Date of the Report

.47 Subsequent to the date of the report on the financial statements that the accountant has compiled, he or she may neeoma aware that facts may have existeda.t that date that might have caused him or her t.o believe that informa­tionsupplied by the entity was incorrect, incomplete, or otherwise unsatisfac­tory had the accountant then been aware of $Uch facts. 9 Because of the variety of conditions that might be encountered, some of the procedures conta:ined in this section arc necessarily set out only in general tenus; the specific actions to be taken in a particular case may vary with t.he circumstances. The accountant would be well advised to consult with his or her legal counsel when he or she encounters the circumstanees to which this section may apply because oflegal implications that may be involved in actions contemplated herein .

. 48 After the date of the accountant's compilation report, the accountant has no obligation to perfonu other compilation procedures with respect to the financial statements, unless new infonuation comes to his or her attention. However, when the accountant becomes aware of information that relates to financial statements previously reported on by him or her, but that was not known to the accountant at the date of the report, (and that is of such a na­ture and from such a souree that the accountant would have investigated it had it eome to his or her attention during the course of the compilation), the

S For Purp<lSes of this se<:tl0.l'l, with respect to compiled financial statements in which the ac­countant does not report, the submission ofilie compiled financial statements is the equivalent of the accountant's compilation or review report date.

9 See footnote 8.

AR §80.44 App. J-1

Compilation of Financial Statements 2623

accountant should, as soon as practicable, undertake to determine whether the information is reliable and whether the facts existed at the date of the report. The accountant should dis(''Uss the mat.ter with his or her client at whatever management levels the accountant deems appropriate and request cooperation in whatever investigation may he necessary. In addition to management, the accountant may deem it appropriate to discuss the matter with those charged ;''lith governance. If the nature and effed of the matter are such that (a) the accountant's report or the financial statements would have been affected if the information had been known to the accountant at the accountant's compila­tion report date and had not been reflected in the financial statements and (b) the accountant believes that persons are currently using or are likely to use the financial statements, and those persons would attach importance to the information, the accountant should obtain additional or revised information. Consideration should be given to, among other things, the time elapsed since the financial statements were issued .

• 49 When the accountant has concluded that action should be taken to prevent further use of the accountant's report or the financial statements, the accountant should advise his or her client to make appropriate disclosure of the newly discovered fads and their impact on the financial statements to persons who are known to be currently using or who are likely to use the financial statements. When the client undertakes · to make appropriate disclosure, the method used and the disclosure made will depend on the circumstances. For

. example

a. if the effect of the subsequently discovered information on t.he accountant's report or the financial statements can promptly be determined, disclosure should consist of issuing, as soon as prac­ticable, revised financial statements and., when applicable, the accountant's report. The reasons for the revision usually should be described in a note to the financial statements and, when appli­cable, referred to in the accountant's report. Generally, only the most recently issued compiled financial statements wouJd need to be revised, even though the revision resulted from events that had occurred in prior years.

b. when issuance of financial statements for a subsequent period is imminent, so that disclosure is not delayed, appropriate disclo­sure of the revision can be made in such statements instead of reissuing the earlier statements, pursuant to subparagraph (a).

c. when the effect on t..'1e financial statements of the subsequently discovered information cannot he promptly determined, the is­suance of revis~Ai financial statements would necessarily be de­layed. In this circumstance, when it appears that the informa­tion wi11 require a revision of the statements, appropriate disclo­sure would consist of notification by the client to persons who are known to be using or who are likely to use the financial state­ments that the statements should not be used; that revised fi­nancial statements 'will be issued; and, when applicable, that the accountant's report will be issued as soon as practicable .

• 50 The accountant should take whatever steps he or she deems necessary to satisfY himself or herself that the client has made the disclosures specified in paragraph ,49 .

• 51 If the client refuses to make the disclosures specified in paragraph .49, the accountant should notify the appropriate personnel at the highest levels within the entity, such as the manager (o""'ller) or those charged with gover­nance, of such refusal and of the fact that, in the absence of disclosure by the

App. J-2 AR §80.S1

2624 Statements on Standards for Accounting and Review Services

client, the accountant will take steps as outlined subsequently to prevent fur­ther use of the financial statements and, if applicable, the accountant's report. The steps that can appropriately be taken will depend upon the degree of cer­tainty ofthe accountant's knowledge that persons exist who are currently using or who will use the financial statements and, if applicable, the accountant's re­port and who would attach importance to the information and the accountant's ability as a pradical matter to communicate with them. Unless the accoun­tant's attorney recommp..nds a different course of action, the accountant should take the following steps to the extent applicable:

a. Notification to the client that the accountant's report must no longer be associated with the financial statements.

b. Notification to the regulatory agencies having jurisdiction over the client that the accountant's report should no longer be used.

c. Notification to each person known to the accountant to be using the fmaneiaI statements that the financial statements and the ac­countant's report should no longer be used. In many instances, it will not be practicahle for the accountan t to give appropriate indi­vidual notification to stakeholders whose identities ordinarily are unknown to him or her; notification to a regulatory agency hav­ingjurisdiction over the client will usually be the only practicable way for the accountant to provide appropriate disclosure. Such notification should be accompanied by a request that the agency take whatever steps it may deem appropriate to accomplish the necessary disclosure .

. 52 The following guidelines should govern the content of any disclosure made by the accountant in accordance with paragraph .51. to persons other than his or her client:

a. The disclosure should include a description of the nature of the subsequently acquired information and its efi'eet on the financial statements.

b. The information disdosed should be as precise and factual as pos~ sible and should not go beyond that which is reasonably necessary to accomplish the purpose mentioned in the preceding subpara­graph (a). Comments concerning the conduct or motives of any person should be avoided.

If the client has not cooperated, the accountant's disclosure need not detail the specificinformation hut can mere1y indicate that the client has not cooperated with the accountant's attempt to substantiate information that has come to the accountant's attention and that, if the information is true, the accountant be­lieves that the compilation report must no longer be used or associated with the financial statements. No such disclosure should be made unless the accountant believes that the financial statements are likely to be misleading and that the aceountant's compilation report should not be used.

Supplementory Information .53 When the basic financial statements are accompanied by information

presented for supplementary analysis purposes, the accountant should clearly indicate the degree of responsibility, if any, he or she is taking with respect to such information. "Then the accountant has compiled both the basic financial statements and other data presented only for supplementary analysis purposes, the compilation report should refer to the other data, or the accountant can issue a separate report on the other data. If a separate report is issued, the report

AR §80.52 App. J-3

Treasury DepartIn en t Circular No. 230 (Rev. 4-2008) Cat. Num. 16586R www,jrs.gov

Department of the Treasury

Internal Revenue Service

H.egulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraiscl*s before the Internal Revenue Service

Title 31 Code of Federal Regulations, Subtitle A, Part 10, published September 26, 2007

App. K-l

§ to.21 Knowledge of client's omission,

A practitioner who, having been retained by a client

with respect to a marter administered by the Internal

Revenue Service, knows that the client has nol com,· plied with the revenue laws of the United Sf.ates or

has made an error in or omission from any return,

document, aflidavit, or other paper \\hich the client submitted or executed under the revenue laws of the

United States, must advise the client promptly or the fact of such noncompliance, error, or omission.

The practitioner must advise the diem of the conse­

quences as provided under the Code and regulations

of such noncompliance, error, or ornission,

§ 10.22 Oiligcllce as to accuracy.

i·:(~)<!111,: ii.f~fdt. Aprac~itjontlr >must exercise dtlc

~,iigim~~·:>: : '.· '. . . "'paring orass:istii1g in the pte.p~ti()ll of,

' .. '. M:i;:a:¢r::~7s:0df~::~'~e~~::~ . , . gtliecorrectne~s qfornl,Pt'·wtit·

. . . . made by the 'practitionf!i' to' tfje

f~~~~~i'''of,theTreaSury; and (3) Ig detoooining the correctlie.ss of oral or writ­

terll'cprescntations milJe by the practitioner f.O cii,

cntswith reference to any maHer administercq by the

Internal Revenue Service, (b) Relii:mce on others, Except as provided in §§

10.34, 1035 and 1 {),37, a practitioner will he pre­

sumed to h,avci!xercised due diligence for purposes of this section if the practitioner relies on the work

produotofanother person and the practitioner used reasonable care in engaging. supervising, (raining,

and evaluating the person, taking prope.r account of

the nature of the relat10nship between rhe practilio­

ncr and the person. (c) EJfe(:livelapl'licahility dale. This section is ap­

plicable on September 26. 2007.

§ 10.23 Prompt dispnsition of pending matters.

A practitioner may nol unreasonably delay the

Plige 16

prompl disposition of any matter before tne Internal Revenue Service,

§ 10.24 Assistance from or to disbarred or sus­pended persons and former Internal Revenue

Serviee employees.

;\ practitioner may not, knowingly and directly Of

indirectly:

(il) AC~'Ct){ assistance from Of Assist any pers()Jl who is under disbarment or suspension from practice be·

fore the Internal Revenue Service if the assistance

relates to it matter or matters constituting practice

before (he Internal Revenue Service,

(b) Accept assistance fi'om any fonner government

employee where the provisions of § 10,25 or allY Federal law would be violated.

§ 10.25 Practice by formergovernment emp!oyees, their partners and tbeir associates.

(a) Definitions. For purposes of this section-

(1) Assist means to act in such a way as to advise, furnish information to, or otherwise aid another per­

son, directly, or indirectly,

(2) Government employee is an officer or employ­

ee of the United States or any agency of the United

States, including a special Goven1l11cnt employee as

defined in 18 US,C 202(a), or of the District of Co­

lumbia, at of any State, or a member of Congress or

of any State legislature, (3) Member ~f a firm is a sole praGtitioner or an

employee or associate thereol: or a partner, stock­

holder, associate, affiliate or employee of a partner, ship, joint venture, corporatioli, professional associa lion or other affiliation of two or more practitioners

who represent nongovernmental parties.

(4) Particular matter involving specific parlies is defined at 5 CFR 2637.201(c), or superseding post·

employment regulations issued by the US Oflice of Government Ethics,

(5) Rule includes Treasury regulations, whether

issued or under preparation for issuance as notices of proposed rulemaking or as Treasury decisions.

revenue rulings, and revenue procedures pllb-

Treasury Dept Circular 230

App. K-2

Treasury Department eire,ular No. 230 (Rev. 4 ... 2008) Cat. Num. 16586R www.irs.gov

Department of the Treasury

Internal Revenue Service

Regulations G'overning the Practice of Attorneys, CCI·tHied Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrollcd Retirclncnt Plan Agents, and Appraisers before the Internal Revenue Service

Title 31 Code of Federal Regulations, Subtitle A, Part 10, published September 26,2007

App. L-l

fore the Intemal Revenue Service.

(b) Procedures 10 ensure best practices/hI' {(n: ad

visors Tax advisors with responsibility for oversee­

ing a firm '$ practice of providing advice concerning

Federal tax issues or of preparing or assisring in the

preparation of submissions to the Internal Revenue Service sbould take reasonable steps to ensure that

the firm's procedures tor all members, associates,

and employees are consistent v. ilh the best practices

ser forth in paragraph (a) {If this seclion.

(c) Applicabiliry dalc. This section is effective after

June 20, 2005_

§ 10.34 Standards with respect to {,IX returns and

documents, affidavits and other papers.

(a) [Reserved] (b) Documents, affidavits and other papers '-

(I) A practitioner may not advise a client to take

a position on a document, atfidavit or other paper

submitted to the Internal Revenue Service unless the

position is not frivolous, (2) A practitioner may not advise a client to sub­

mit a document, affidavit or other paper to fhe Inter­

nal Revenue Service -(i) The purpose of which is to delay or impede

the administrrttion of (he Federal tax laws;

(ii) That is frivolous; or

(iij) That contains or omits infonnation m a

manner that demonstrates an inten(ional disregard of

a rule or regulation unless the practitioner also ad­

vises the client to submit a document that ('vidences

a good faith challenge to the mle or regulation, (c) A{iFfsing diems on pOlenliC!! penalties-

(l) A practitioner must inform a client of any

penalties thaI are reasonably likely to apply to the

client with respect to ...

(I) A POSiT ion taken on a tax return if--(A) The practitioner advised the client with

respect to the position; Of

(B) The practitioner prepared or signed the tax

retum; and (Ii) Any document affidavit or other paper sub·

mitted to the lntema! Revenue Service.

(2) The practitioner also must inform the chent

of any opportunity to avoid any such penalties by

disclosure, if relevant, and of the requirements for

adequate disclosure. (3) This paragraph (c) appiies even if the prac­

titioner is not subject to a penalty under the Internal

Revenue Code with respect to the position or with

respect to the document, amdavit or other paper sub­

mitted.

(d) Relyirigon iii/ormation furnished by cliems. A

practitioner advisiriga client t.o take apositioll on a

~~:~tB!r::~~E7; in good fbitb.wlthdii'tverfflcationupon 11lforll1atiOli

fhrnished bytbetlient. The practitioner may not , however, ignore Hie implkations cif infOrmation fnr-

(e) [ReservedJ

(f) EfJective/applicability date. Section 10.34 is applicable to tax returns, documents, affidavits, and other papers filed on or after September 26. 2007.

§ 1(}"35 Requirements for covered opinions.

(a) A practitioner who provides a covered opinion

shall comply with the standards of practice in this

section.

(bj Definitions, For purposes of this subparl ... ~ ....

(I) A practitioner includes any individual de­

scribed in § ]02(a)(5). (2) Covered opinion--

(i) in general. A covered opinion is written

advice (including electronic communications) by a

practitioner cOl1ceming one or more Federal tax is­

sues arising from .~

(A) A tmnsaction thar is the same as or sub­

stantially similar to a transaction that, at the time the

advice is rendered, the Internal Revenue Service has

determined to be a tax avoidance transaction and

identified by published guidance as a listed transac­

tion under 26 CFR 1.6011-4(b)(2);

Page 21

App. L-2

ET Section 102 -Integrity and Objectivity

.01 Rule 102-lntegrity and objectivity. In the performance of any professional service, a member shan maintain objectivity and integrity, shaH be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her iudgment to others.

[As adopted January 12, 1988,J

Interpretations under Rule 102 -Integrity and Objectivity

.02 102-1-Knowing misrepresentatlons in file preparation of financial statements or records,

A member shal! be considered to have knowingly misrepresented facts in violation of rule 102 [J;;I section 102.01] when he or she knowingly-

a. Makes, or permits or directs another 10 make, materially false and misleading entries in an entity's financial statements Of records; or

b. FaHs to correct an entity's financial statements or records that are materially false and misleading when he or she has the authority to record an entry; or

c. Signs, or permits or directs another to sign, a document containing materially false and misleading information.

[Revised. effective May 31, 1999, by the Professional Ethics Executive Committee.]

.03 102·2-Conflicts of interest.

A conflict of interest may occur If a member performs a professional service for a client or employer and the member or his or her firm has a relationship with another person, emity. product, or service that could, in the member's professional judgment, be viewed by the client, employer,or other appropriate parties as impairing the member's objectivity. If the member be6eves that the professional service can be performed with objectivity, and the relationship is disclosed 10 and consent Is obtained from such client, employer, or other appropriate parties, the rule shall not operate to prohibit the performance of the professional service. 'vVhen making the disclosure, th& member should consider Rule 301 , Confidential Client Information [ ET section W"QjJ.

Certain professional engagements. such as audits, reviews, and other attest services. require independence lndependence impairments under rule 101 f ET section 19t1J.], its interpretations, and rulings cannot be etlminated by such disclosure and consent

The following are examples, not all-inclusive, of situations that should cause a member to consider whether or not the client, employer, or other appropriate parties could vtew the relationship as impairing the members objectivity:

• A member has been asked to perform litigation services for the plaintiff in connection with a lawsuit fried against a client of the member's firm.

• A member has provided tax or personal financial planning (PFP) services for a married couple who are undergoing a dlvorce, and the member has been asked to provide the services for both parties during the divorce proceedings.

• In connection with a PFP engagement, a member plans to sugg.est that the client invest in a business in which he Of she has a financial interest.

• A member provides tax or PFP services for several members of a family who may have opposing interests.

• A member has a significant financial interest, is a member of management, or is in a position of influence in a company that is a major competitor of a client for which the member performs managoment consulting services.

• A member serves on a city's board of tax appeals, which considers matters involving several of the member's tax clients.

• A member has been approached to prOVide services in connection with the purchase of real estate from adient of the member's firm,

• A member refers a PFP or tax client to an insurance broker Of other service provider, which refers clients to the member under an exclusive arrangement to do so.

• A member recommends or refers a client to aserviee bureau in which the member or partner(s) in the member's firm hold material financial interest(s).

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The above examples are not intended to be ail-inclusive.

[Replaces previous interpretation 102·2, Conflicts of Interest, August 1995, effective August 31, 1995.}

.04 102·3-0oligatlons of a memberto his or her employer's external accountant.

Under rule 102 [~§f<tiQnJQ4.,Q.1J, a member must maintain objectivity and integrity in the performance of a professional service. In dealing with his or her employer's external accountant, a member must be candid and not knowingly misrepresent facts Of knowingly fail to disclose material facts. Thjs would include, for example, responding to specific inquiries for which his or her employer's external accountant requests written representation.

[Effective November 30, 1993.J

.05 1 02·4-$ubordinalion of jUdgment by a member.

Rule 102 [ET sectiQJllQ4,QJ] prohibits a member from knowingly mjsrepresenting facts or subordinating his or her judgment when performing professional services fur a client, for an employer, or on a volunteer basis. Although Rule 102 prohibits subordination of judgment to a client, this interpretation addresses differences of opinion between a member and his or her supervisor or any other person within the member's organization.

If a member and his or her supervisor or any other person within the member's organization .havea difference of opinion relating to the application of accounting principles; auditing standards; or other rerevant professional standards, including standards applicable to tax and col1$Ulttng services or applicab!e laws or regulations, then self-interest, famlHarity, and undue influence threats to the member's compllancewith Rute 102 may exist. Accordingly. the member should apply appropriate safeguards so that the member does not subordinate his or her judgment when the member concludes the difference of opinion creates significant threats to the member's integrity and objectivity.

In sssessmg1he Significance of any identified threats, the member should form a conclusion, after appropriate research or consultation, about whether the result of the position taken by the supervisor or other person

a. fails to comply with professional standards. when applicable; b. creates a material misrepresentation of fact; or c. may VIOlate applicable laws Of regulations.

If the member concludes that the position taken is not in compliance with professional standards but does not result in a material misrepresentation of fact or a violation of applicable laws or regulations, then threats would not be considered significant. However, the member should discuss his or her conclUsions with the person taking the position.

If the member concludes that the position results in a material misrepresentation of fact or a violation of applicable laws or regulations, then threats would be considered significant. In such circumstances, th!il member should discuss his or her concems with the supervisor. If the difference of opinion is still not resolved, then the member should discuss his or her concerns with the apprormate higher !avails) of management within tile member's organization (for example, the supervisor's immediate superior, senior management, and those charged with govemance).

If after discussing such concerns with the supervisor and appropriate higher level(s) of management within the member's organization, the member concludes that appropriate action was not taken, then the member should consider. in no specific order, the following safeguards to ensure that thr~ts to the member's compliance with Rule 102 are eliminated or reduced to an acceptable level:

• Determining whether any additional requirements exist under his or her employer's internal policies and procedures for reporting differences of opinion.

• Determining whether any responsibilities exist to communicate to third parties, such as regulatory atrtnorities or the employer's {former employer's} external accountant. In considering such communications, the member should be cognizant of his or her obtlgations under lnterpretation No. 501-9, "Confidentiallnfurmation Obtained From Employment or Volunteer ActivitIes: under Rute 501, Acts Discreditable [ET section 501.lOJ, and Interpretation No. 102·3, "Obligations of a Member to His or Her Employer's Extemal Accountant: under Rule 102 (ET section 102.04).

• Consulting with his or her legal counsel regarding his or her responsibilities.

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• Documenting his or her understanding of Ihe facts, the accounting principles, auditing standards, or other relevant professional standards involved or appllcable laws or regulations and the conversations and parties with whom these matters were discussed.

If the member concludes that no safeguards can eliminate or reduce the threats to an acceptable level or if the member concludes that appropriate action was not taken, then he or she should consider his or her continuing relationship with the member's organization and take appropriate sleps to eliminate his or her exposure to subordination of judgment

Nothing in this interpretation would preclude a member from resigning from the member's organization at any time. However, resignation may not reUeve the member of his or her responsibilities ir the situation, incfuding any responsibility to disclose to third parties, such as regulatory authorities or the employer's (former employer's) external accountant.

A member should use professional judgment and app~y similar safeguards, as appropriate, to other situations involving a difference of opinion so that the member does not subordinate his or her judgment.

[Effective November 30, 1993.RevJsed May 2013, revisions effective August 31. 2013.J

.C6 102··5-Applicabilily of rule 102 to members performing educational services,

Educational services (for example, teaching full- Of part-time at a university, teaching a continuing professional education course, or engaging in research and scholarship) are professional services as defined in ET section 92.30, and are therefore subject to rule 102 [1;1 §eOlian 102.01). Rule 102 [ET section 102.01] provides that the member shall maintain objectivity and integrity, shall be free of conflicts of interest. and shan not knowingly misrepresent facts or subordinate his or her judgment to others.

{Effective March 31, 1995. Revised August 2011 to update for revIsed numerical definition reference.]

.07 102·6-Professional services involving client advocacy.

A member or a member's firm may be requested by a client~

1. To perform tax or consulting services engagements that involve acting as an advocate for the cUent.

2. To act as an advocate in support of the client's position on accounting or financial reporting issues, either within the firm or outside the firm with standard setters, regulators. Of others.

Services provided or actions taken pursuant to such types of client requests are professional services [ ET;?ection 92.30J governed by the Code of Professional Conduct and shall be performed in compliance with Rule 201, General Standards [!;1JI.{?.!<ll.QO 201.011. Rule 202. Compliance .Witj1. StandarrJs [ ET section 2Q2 .01 ]. and Rule 203, Accounting Principles [1;1 ser;;ti_Qn 203,P'1], and interpretations thereof, as applicable. Furthermore, in theperiormance of any professional service, a member shall comply with rule 102 rET section 102.01], which requires maIntaining objectivity and integrity and prohlbits subordination of judgment to others, When periorming professional services requiring independence, a member shalt also comply with rule 101 (ET section 101.01] ofthe Code of Professional Conduct.

Moreover, there is a possibility that some requested professional services involving chem advocacy may appear to stretch the bounds of periormance standards, may go beyond sound and reasonable professional practice, or may compromise credibility, and thereby pose an unacceptable risk of impairing the reputation of the member and his or her firm with respect to independenoo, integrity, and objectivity. In such circumslances, the member and the member's firm should consider whether it is appropriate to periorm the service.

[Effective August 31, 1995. Revised August 2011 to update for revised numerical definition reference}

Footnotes (ET Section 102 -Integrity and Objectivity):

[fn 1J {Footnote deleted, effective August 31, 2013, by the Professional Ethics Executive Committee.]

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