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supporting Schedule C items for car and truck expenses,
professional dues, telephone and communications, local travel,
and CPE.
Meanwhile, Schedule C deductions had likewise become a focus
of the audit for 1998 and 1999, as evidenced by a Form 4564 dated
May 14, 2001, identified as “Request Number 2” for 1998 and 1999,
requesting documentation with respect to, inter alia, “All
Business expenses listed on Schedule C for both years” and “All
travel and entertainment expenses for both years listed on
Schedule C including a diary showing your travel itinerary”.
On January 22, 2002, a final examination meeting was held
with Mr. Gendler. The record indicates that as of that date,
petitioner had not provided further materials responsive to the
above-described requests for substantiation. At the meeting, Mr.
Gendler, acting under direction from petitioner’s counsel,
Anthony Bentley (Mr. Bentley), declined to consent to an
extension of the time for assessment. As a result, a decision
was made to close the case based on the impending statute of
limitations. Shortly after the meeting, Mr. Gendler apparently
provided copies of Amex statements for 1997 and certain bank
statements, but these items were not analyzed or incorporated in
the adjustments on account of the decision to close the case.
The notice of deficiency underlying this proceeding was
issued on February 25, 2002. Among other things, the notice
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