Horvath opened up a small convenience store, organizing the business as a sole proprietorship. Since she was concerned that she would not have sufficient financing, she borrowed $20,000 from Blaum, her brother-in-law. When the business began earning profits, Horvath spent these monies on personal items. When her accountant completed her tax return, Horvath was informed that she owed a great deal of money to the government.

Is Horvath required to pay taxes herself on the profits from the store or is it the stores responsibility?

Is Blaum required to pay taxes himself on the profits from the store or is it the stores responsibility?

Can Blaum legally demand that he be allowed to manage the businesss financial matters in the future?