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determined that Ghalardi had received unreported income
during 1993 in the amount of $15,585, the excess of the
sum of the total deposits to Ghalardi's bank accounts and
cash received, $38,430, over the gross receipts reported
on Ghalardi's Schedule C, $22,845. Second, respondent
determined that Ghalardi is entitled to none of the
expenses claimed as deductions on its Schedule C for 1993
because Ghalardi did not establish that it was engaged in
a trade or business, that the amounts were paid, or that
they constituted allowable deductions. Finally, respondent
determined Ghalardi's liability for the accuracy-related
penalty imposed under section 6662(a) for negligence or
disregard of rules or regulations or, in the alternative,
for substantial understatement of income tax.
Respondent made seven adjustments in the notice of
deficiency issued to Mr. Webber. First, respondent
increased Mr. Webber's taxable income for 1992 and 1993
in the amount by which the total deposits to Mr. Webber's
bank accounts and cash received exceed the gross receipts
reported on Mr. Webber's Schedules C as follows:
1992 1993
Total deposits and cash received $62,140.06 $47,711.92
Less gross receipts reported 31,546.00 28,039.00
Unreported income 30,594.06 19,672.92
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