Bill McDonald - Page 26

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          cashier’s checks for the purchase of a home placed in his wife’s            
          name, living and other personal expenditures.                               
               The controverted cashier’s checks total $25,000, which,                
          initially, would indicate a shortfall of about $4,000 between               
          McDonald’s sources and applications.  Further, McDonald’s                   
          analysis does not account for living expenses.  Finally,                    
          McDonald’s analysis of the possible sources is offered in a                 
          vacuum and does not account for undeposited receipts from                   
          clients.  Again, petitioners’ intentional discarding of the                 
          accounts receivable information and the concealment of the                  
          identity of their clients is the reason the source analysis is              
          not complete or reliable.                                                   
               Under these circumstances, we find that petitioners have not           
          carried their burden.  Hence, respondent’s determination that the           
          various checks and cash items are income to petitioners is                  
               Self Employment Tax--To the extent that additional income is           
          determined in these cases, petitioners agreed on brief that any             
          increase in self-employment tax is merely computational.                    
          Respondent determined that additional income was derived from               
          petitioners’ practice of tax accounting.  Such income of                    
          petitioners is subject to self-employment tax.                              
               Taxability of McDonald’s Social Security Benefits--This                
          appears to be a computational item that is dependent on the                 
          parties’ agreement to be bound by the final outcome of an earlier           
          case regarding whether McDonald was married for tax purposes                

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Last modified: May 25, 2011