- 18 - instances, the corporation or partnership had earned or received fees. As a result of the failure to maintain adequate records, petitioners’ testimony is uncorroborated and rendered less credible. Although petitioners pointed out situations where they contended that no fee or a lesser fee was charged, when asked whether Pease understated any fees, petitioners’ recollection failed them. Moreover, Pease was not able to secure the names of all of petitioners' clients. Petitioners were either unable or unwilling to disclose the identity of clients missed or not located by Pease. Finally, petitioners were evasive and vague when confronted by the Court with inconsistencies in their testimony or evidence. Considering all these circumstances, we find petitioners’ testimony to be uncorroborated and without credibility. Petitioners also argue that some of their clients may have failed to pay for services performed. In those instances, petitioners argue that M&M, which is on the cash method of accounting, should not include those amounts for the 1989 year. Petitioners’ argument has several fatal weaknesses. Initially, petitioners have no proof (because they discarded the billing and receivable records) of who actually paid and who did not. It was the absence of those records that forced respondent to reconstruct petitioners’ income for 1989. A reconstruction method is not a direct method of accounting, but an indirect method which can, to some extent, be based on judgment. Again,Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011