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reasons, Caufield's schedules are not reliable. Petitioners have
failed to prove by a preponderance of the evidence JKY's
entitlement to additional deductions. Respondent's determination
that charges on personal credit cards are to be treated as
personal living expenses will be sustained.
Conclusion
We have examined the arguments of petitioners that
respondent's determination is arbitrary and erroneous and have
determined that they are without merit.
We also conclude that petitioners' argument that respondent
has failed to establish a likely source of income or to conduct a
reasonable investigation of leads to negate the existence of
nontaxable sources of income is without merit. Petitioners'
claims of nontaxable sources were the alleged loans from friends
and relatives and advances to JKY by suppliers. Respondent
considered those claims made by petitioners during the
examination, included some of the claimed liabilities in her net
worth determinations, and determined others were not valid.
Where relevant leads are not forthcoming from petitioners,
respondent is not required to negate every possible source of
income. Holland v. United States, 348 U.S. 121, 137 (1954).
While we have adjusted the net worth determination to include
other liabilities, such corrections do not invalidate
respondent's entire determination. Hoffman v. Commissioner, 298
F.2d 784, 788 (3d Cir. 1962), affg. in part T.C. Memo. 1960-160.
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