Spokane Journal of Business

Douglass sues L&D over filings

Prominent Spokane developer accuses LeMaster & Daniels of making expensive mistake

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Spokane developer Harlan Douglass and his wife, Maxine, are suing LeMaster & Daniels PLLC, also of Spokane, for allegedly making a mistake on their income-tax returns that the Douglasses claim cost them $1.1 million in taxes and fines.

LeMaster & Daniels has no comment on the matter because its in litigation, says Harley Reckord, the accounting firms chief operating officer for the Spokane region.

The Douglasses allege in their suit, which they filed last month in Spokane County Superior Court, that LeMaster & Daniels, the Spokane accounting firm that prepared their personal tax returns, didnt file a necessary form to allow the couple to claim certain depreciation deductions on their 1993 and 1994 income-tax returns. The accounting firms omission resulted in an Internal Revenue Service audit in 1998, the lawsuit charges.

Following the audit, the IRS notified the Douglasses that the deductions had been disallowed because of the failure to file the form, called Form 3115, and that they owed additional taxes of about $720,000 and interest of $386,000.

The Douglasses were not aware of the failure to file the Form 3115 or the consequences of that omission until they were so notified by the IRS, the lawsuit says.

In their lawsuit, the Douglasses are seeking judgment of at least $1.14 million, plus attorneys fees. They are represented by Seattle attorney Michael Murphy, of Groff & Murphy PLLC.

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