Thai V. Pham and Khuy T. Bui - Page 6

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               State of Texas                                                         
               Tarrant County                                                         
                              EQUIPMENTS [sic] RENTAL AGREEMENT                       
               LESSOR:   CHUNG V TRAN                                                 
               LESSEE:   KHUY T BUI                                                   
          1.  EQUIPMENTS [sic]:  Sewing machines and equipments                       
          [sic] as needed                                                             
          2.  TERM:               Cash, $600 per month for 12 months                  
          in 1988                                                                     
          total of $7200                                                              
                                   Lessor agreed to repair and maintain               
               all the equipments [sic] as needed per Lessee in good use              
                                   Lessee can not assign or sub-let all               
               the equipments [sic] to other persons without the agreement            
               of Lessor                                                              
                                   In the event of any breach of the                  
              agreement Lessor can have full rights to terminate this                
               lease in accordance with state law and re-claim possession             
               of the leased equipments [sic].                                        

               Signed and agreed on this 4th day of Jan 1988.                         

               LESSOR:   CHUNG V TRAN                                                 

               LESSEE:   KHUY T BUI                                                   
               Aside from this rental agreement, petitioners are unable to            
          produce any written record or other documentation reflecting                
          actual payment of the rent.  Respondent, therefore, disallowed              
          the claimed deduction due to lack of substantiation.                        
               In taxable years 1988 and 1989, petitioners reported gross             
          receipts from their sewing business in the amounts of $237,737              
          and $123,407, respectively.  Because petitioners failed to                  
          maintain records or other written documentation reflecting the              

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