Maurzal Frias and Teresa Frias - Page 5

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          Respondent determined that petitioners had underreported their              
          gross receipts for 1992 by $16,403.  (Again, respondent did not             
          consider all deposits to be gross receipts; her revenue agent               
          backed out loan proceeds, account transfers, and gifts.)                    
          Auto and Truck Expense                                                      
               Petitioners had three vehicles that they used in conjunction           
          with their business activities.  Petitioners' 1991 Schedule C               
          shows 28,966 business miles and 4,000 personal miles.                       
          Petitioners did not keep contemporaneous logs of business miles             
          driven; the mileage numbers on their tax returns were estimates.            
               At the time of the audit, petitioners reconstructed their              
          business mileage for 1991.  Respondent accepted petitioners'                
          reconstruction and allowed 25,600 business miles for 1991.                  
               At the time their case was heard by an IRS Appeals officer,            
          petitioners reconstructed their 1991 mileage to reflect a total             
          of 29,560 business miles.  In their trial memorandum to this                
          Court, petitioners reconstructed their 1991 mileage to reflect a            
          total of 36,9204 business miles.                                            
               Petitioners' 1992 Schedule C reflects total miles of 38,286            
          with business miles of 34,786 and personal miles of 3,500.  At              
          the time of the audit, petitioners reconstructed their business             
          mileage for 1992.  Respondent accepted petitioners'                         
          reconstruction of 28,909 business miles for 1992 but deducted               


               4  Petitioners' exhibit incorrectly totals the miles at                
          30,320.                                                                     



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