- 18 -
(3) Inconsistent Explanations of Behavior
Petitioner testified that he used his brown books to calculate
petitioners' annual charitable contributions. He also claimed that
he used the brown books to prepare petitioners' tax returns. The
figures on the returns, however, did not match the figures in the
books. Petitioner asked Ms. Bellamy to take her figures and
calculate 10 percent of his gross profit for each year under
consideration. Petitioner agreed that Ms. Bellamy's income analysis
was correct because 10 percent of the gross profit calculated from
Ms. Bellamy's figures approximated petitioners' tithing. We
conclude that although petitioner used his brown books to calculate
petitioners' tithing, he chose not to use them when he prepared
petitioners' Federal income tax returns.
The brown books also were used to complete a 1985 bank loan
application. The figures reported on the application were
inconsistent with the figures petitioner listed on petitioners'
1985 Federal income tax return. Petitioner was denied the loan
based on the application, which included petitioners' 1983 and 1984
income tax returns. In a letter written to the bank, he tried to
explain why the reported income was so low by informing the bank
that he had a $36,788 profit during the first 8 months of 1985. He
used his brown books to compute these figures. Subsequently, he
reported no taxable income on the 1985 return. Thus, petitioner's
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011