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OPINION
Neither petitioner nor Flair filed income tax returns or
kept accounting records other than bank statements and canceled
checks for the years in issue. Respondent's revenue agent was
forced to construct records of income and expense for both
petitioner and Flair. Petitioner offered little in the way of
testimony at trial and called no witnesses. As the following
colloquy between the Court and petitioner illustrates, petitioner
did not dispute respondent's reconstruction of income:
THE COURT: Do you have any -- do you dispute as
to how the revenue agent came up with his numbers?
MS. DAVIS: I don't know whether I have a dispute
or not. I mean, I think that he [the revenue agent]
did that in a remarkably good way. * * * And I have
absolutely no issue with Mr. Talbott [the revenue
agent] or Mr. McLoughlin [respondent's counsel].
A. Wage Issue
Petitioner argues on brief that the amounts received from
Flair were either loan payments or return of capital.
Petitioner's arguments, however, incorporate facts that are not
in the record. Assertions on brief are not evidence. See Rule
143(b). There is no evidence in the record that the amounts
received by petitioner from Flair were not compensation to
petitioner. Petitioner kept no accounting records; section 6001
requires taxpayers to maintain adequate records from which their
tax liability can be determined. Petzoldt v. Commissioner, 92
T.C. 661, 686 (1989). Respondent's determinations in the
statutory notice of deficiency are presumed to be correct.
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Last modified: May 25, 2011