Clinton N. and Naomi K. Bohannon - Page 20

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            substantiating the amount and purpose of the item claimed.  Sec.                            
            1.6001-1(a), Income Tax Regs.                                                               
                  Petitioners did not have books and records to support their                           
            deduction of these expenses.  Petitioners have not proven that                              
            they paid the expenses or that the expenses were made for a                                 
            business purpose.  Interest expenses make up $108,576 of the                                
            $127,985 claimed for 1988 (84 percent) and $96,693 of the                                   
            $135,824 claimed for 1989 (71 percent), yet petitioners provided                            
            no evidence that they had any indebtedness relating to the dirt                             
            fill operation.                                                                             
                  Kane obtained the amounts to report as income and deductions                          
            from the dirt fill operation from the trustee's listing of cash                             
            receipts and disbursements; however, those records are not in                               
            evidence.  Petitioners produced no bills or checks to                                       
            substantiate the claimed expenses.                                                          
                  Petitioners offered no credible evidence to substantiate                              
            their claimed expenses from the dirt fill operation for 1988 and                            
            1989.  Thus, we sustain respondent's disallowance of these                                  
            expenses.                                                                                   
            C.    Capital Gains From Sales of Stock in Bohannon, S.A.                                   
                  Petitioners claimed that their basis in the Bohannon, S.A.                            
            stock they sold in 1988 was $30,000, and $30,000 for the stock                              
            they sold in 1989.  Respondent disallowed petitioners' claimed                              
            bases in their Bohannon, S.A. stock because petitioners did not                             
            substantiate these amounts.                                                                 




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