- 13 -
an owner of several rental properties. With the exception of the
unreported cash payments from Mr. Hall, petitioner maintained
records for all his endeavors. During the years in issue,
petitioner issued 39 Forms 1099 to various subcontractors in the
conduct of his consulting business. Petitioner documented each
and every payment made to these individuals throughout the 3-year
period. In addition, petitioner supplied his return preparer,
Mr. Pressley, with receipts and documentation for all expenses
stated on his Federal income tax returns. Petitioner's
recordkeeping included retention of documentation for a $3.26
expense. Petitioner was obviously aware of his obligation to
maintain adequate records of his income and expenses. His
failure to maintain any record of the substantial cash payments
received from Mr. Hall was inconsistent with his normal practice.
This pattern of omission was not a good faith or negligent error.
See Kendrick v. Commissioner, T.C. Memo. 1980-270.
Petitioner testified that he was expecting Mr. Hall to
supply him with Forms 1099 reflecting his income and, thus, did
not maintain records of receipts from Mr. Hall. But this
explanation cannot account for petitioner's failure to keep
records after 1989, when it was surely apparent that Mr. Hall was
not going to give petitioner timely Forms 1099. Nevertheless,
petitioner continued his practice of maintaining no records of
income from Mr. Hall.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011