- 5 -
cost of goods sold of $261,628 and a loss of $4,947. Respondent
audited Elan’s 1990 corporate return and determined that Elan's
cost of goods sold should be reduced by $124,904 because of lack
of substantiation. Thus, respondent determined that Elan had
taxable income of $119,957 rather than a $4,947 loss. On March
27, 1995, petitioner consented to immediate assessment and
collection of Elan’s 1990 deficiency in income tax and additions
to tax for negligence and delinquency.
OPINION
A. Whether Petitioner Paid More Than $26,134 of Elan's Expenses
In 1990, petitioner received $368,288 which was payable to
Elan, deposited $222,095 of that amount in Elan’s checking
account, and did not deposit $146,193. The parties agree that
petitioner paid at least $26,124 of Elan’s expenses from the
remaining $146,193 which he received for Elan but did not deposit
in Elan’s bank account. Petitioner contends that he used more
than $26,134 of the $146,193 to pay Elan’s expenses.
A taxpayer is required to keep adequate records to prepare
income tax returns. Sec. 6001. Respondent’s determination is
presumed to be correct, and petitioner bears the burden of
proving otherwise. Rule 142(a); Welch v. Helvering, 290 U.S.
111, 115 (1933).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011