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deduct $230,137 as an ordinary and necessary business expense
with respect to funds allegedly paid to Profiteer Corp.
For 1984, respondent argues that petitioner failed to file a
Federal income tax return, that no period of limitations on
assessment is applicable, and that petitioner has not met his
burden of proving that he paid $230,137 to Profiteer Corp. for
consulting services.
The evidence indicates that petitioners did not file their
1984 Federal income tax return in 1988 and that the period of
limitations for assessment of tax for 1984 remained open when
respondent mailed to petitioner the notice of deficiency for
1984. Therefore, we conclude that for 1984 the period of
limitations does not bar respondent’s assessment of a deficiency
for that year.
We also conclude that petitioner is not entitled to deduct
for 1984 the claimed $230,137 consulting fee allegedly paid to
Profiteer Corp. Petitioner has not adequately substantiated the
fact of payment or the nature of the claimed fee. Petitioner's
testimony regarding the claimed fee is contradictory and not
credible.
The addition to tax under section 6651(a)(1) for 1984
applies unless the taxpayer shows that the failure to file an
income tax return was due to reasonable cause and not due to
willful neglect. Sec. 6651(a)(1). Petitioner contends that he
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