Thai V. Pham and Khuy T. Bui - Page 4

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          threads, ironing, folding, pinning, and packaging.  Upon                    
          completing the finishing work, petitioner Bui returned the                  
          completed product to the manufacturer.                                      
               The manufacturer generally paid petitioner Bui the contract            
          price within 2 weeks of her delivery of the completed product.              
          After receiving payment from the manufacturer, petitioner Bui               
          paid the subcontractors who assembled the garments.                         
               During taxable years 1988 and 1989, three of petitioners'              
          four sons assisted in performing the finishing work.  On their              
          Federal income tax returns for taxable years 1988 and 1989,                 
          petitioners deducted the following sums with respect to amounts             
          allegedly paid to their four sons in exchange for their                     
          performance of the finishing work:                                          
                    Thinh Dat Pham      $7,215.80                                     
                    Dung Tien Pham      8,320.80                                      
                    Duy Duc Pham         7,420.20                                     
                         Total          22,956.80                                     
                    Thinh Dat Pham      $6,732.15                                     
                    Duy Duc Pham        6,917.34                                      
                    Tri Minh Pham         6,035.30                                    
                         Total          19,684.79                                     
          There was no formal policy governing these payments to                      
          petitioners' sons.  All payments to petitioners' four sons were             
          made in cash and were based on records allegedly maintained by              
          the recipient son.  Petitioners did not maintain records or other           
          written documentation of the amounts paid to their sons.  For               

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