- 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