- 3 - Beginning inventory $ 0 Purchases 12,000 Labor 18,000 Materials and supplies 4,000 Other costs 7,500 $41,500 Ending inventory (10,850) Cost of goods sold $30,650 In the notice of deficiency, respondent determined that petitioners had unreported income of $3,341 from the corporation and disallowed the entire amount of cost of goods sold for lack of substantiation. The determinations of the Commissioner in a notice of deficiency are presumed correct, and the taxpayer bears the burden of showing the determinations are incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111 (1933). With respect to the $3,341 received from the corporation, petitioner acknowledged receipt of this amount but contended that the amount represented nontaxable rebates, or purchase-volume discounts, from the corporation. However, other than his own self-serving testimony, petitioner presented no evidence to support this contention. Petitioner failed to meet his burden of proof on this issue. Accordingly, pursuant to section 61, petitioners must include this amount in income. Respondent is sustained on this issue.Page: Previous 1 2 3 4 Next
Last modified: May 25, 2011