Helen Sophie Schroeder - Page 17

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                Respondent has disallowed petitioner's costs of goods sold                   
          for 1991, 1992, and 1993.  Petitioner bears the burden of proving                  
          that she is entitled to the claimed costs of goods sold.  Rule                     
          142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);                     
          Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975),                       
          affg. T.C. Memo. 1972-133.                                                         
                1.  1991                                                                     
                Petitioner has met her burden of proof as to the claimed                     
          costs of $800 for the horse Magic and $2,280 for beef.  However,                   
          petitioner has not met her burden with respect to her claimed                      
          costs for goats and pigs.  Although petitioner subtracted $1,250                   
          for pigs on her 1991 cost of goods sold schedule, she reported no                  
          gross receipts from the sale of pigs.  Since there was no sale of                  
          pigs reported on the 1991 tax return, cost of goods sold for pigs                  
          is not allowable for that year.  Petitioner's testimony showed                     
          that she was confused as to whether she had mislabeled the sale                    
          of pigs as the sale of goats.  Petitioner's return showed the                      
          purchase and sale of 35 goats; petitioner testified that she                       
          never owned that many goats.  Since petitioner cannot establish                    
          what was sold, she is not entitled to cost of goods sold for                       
          those items.  Accordingly, petitioner's total cost of goods sold                   
          for 1991 is $3,080.                                                                
                2.  1992                                                                     
                Petitioner assigned values to some animals in her beginning                  
          and ending inventory based on her estimates of their fair market                   




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