Richard S. Cotler operated his law practice as a corporation. He had the corporation pay disability payments on his behalf. At the end of each year, Cotler’s CPA makes an adjusting entry and charged the disability payments to Cotler.

In truth, Cotler was paying for his disability insurance policy personally. His CPA made the adjustment to ensure this personal payment by Cotler.

Cotler became disabled and collected $72,000 a year for his disability. The insurance company sent Cotler a W-2 showing the ... Log in to view full article.