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During the audit by respondent's representatives of
petitioners' Federal income tax returns for 1985, 1986, and 1987,
petitioners did not cooperate with respondent's representatives.
In spite of requests therefor, petitioners did not make available
to respondent's representatives any meaningful books and records
or other credible documentation regarding the various items that
were examined. As a result of petitioners' failure to cooperate,
respondent's audit adjustments and deficiency determinations at
issue in this case were made on the basis of limited information
and in some instances estimates. Respondent's deficiency
determinations against petitioners for 1985, 1986, and 1987 were
not arbitrary and capricious, and such deficiency determinations
are entitled to the usual presumption of correctness. Welch v.
Helvering, 290 U.S. 111, 115 (1933); Gatlin v. Commissioner, 754
F.2d 921, 923 (11th Cir. 1985, affg. per curiam T.C. Memo.
1982-489); Mendelson v. Commissioner, 305 F.2d 519, 522 (7th Cir.
1962), affg. T.C. Memo. 1961-319.
After granting petitioners' request for a continuance, this
case was tried at a special trial session beginning on
January 10, 1994. At trial, petitioners submitted no credible
and little understandable evidence relating to the adjustments at
issue. Petitioners were unprepared. They offered incomplete and
disorganized documentation. Many documents that were admitted at
trial were objected to by respondent's counsel because the
documents had not been exchanged with respondent's counsel prior
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