- 43 -
In addition, petitioners did not present a coherent
explanation of why certain corporate records were apparently
stored in the Crestwood property and other records stored
elsewhere for business purposes, or why only one corporation
leased part of the Crestwood residence, but several corporations’
records were allegedly lost due to floods at the residence.
Further, petitioners did not adequately explain why C.B. Crest’s
records do not include the months of September, November, and
December 1989 as well as the complete month of August 1989.20
Finally, petitioners did not demonstrate any apportionment
between the expenses associated with the operating of the vending
machines and other water purification systems. Petitioners
concede that they “overlooked” the other business of home water
purification units because it was “an exceedingly small amount of
revenue”.
Mr. Bowden has an accounting background. He knew or should
have known that he was required to maintain adequate books and
records to support the claimed deductions. See sec. 1.6011-1(a),
Income Tax Regs. As noted, petitioners have failed to show that
they maintained adequate books and records to support their
claimed Schedule C deductions.
20 Petitioners testified that “activities in C.B. Crest were
limited”, and thus, activities for August and September 1989 were
recorded in October of that year, and activities for November and
December 1989 were recorded in January 1990.
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