Nicholas M. Romer - Page 10

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          statement.  In addition to petitioner's and Mr. Bistodeau's                 
          testimony, the record contains a handwritten log of petitioner's            
          activities with respect to respondent's criminal investigation of           
          Romer and with respect to Romer's clients.  In addition, Karen              
          Coon, a certified public accountant who was associated with Romer           
          as an independent contractor, testified that petitioner generally           
          worked in the Minneapolis office 2 or 3 days each week during               
          1993.  She also verified that he posted a monthly schedule in the           
          Minneapolis office which showed when he would be working in the             
          office.  We find that this corroborative evidence is sufficient             
          to establish the time, place, and business purpose elements of              
          petitioner's traveling expenses and conclude that the arrangement           
          satisfies the section 1.62-2(e), Income Tax Regs., substantiation           
          requirement.                                                                
               We have also considered respondent's broad assertion that              
          petitioner and Mr. Bistodeau conspired to label petitioner's                
          compensation from Romer as reimbursements under the arrangement             
          in order for petitioner to avoid income tax liability and for               
          Romer to avoid employment tax liability on the amount paid to him           
          during 1993.  Based on our review of the record, we find that a             
          bona fide arrangement existed between petitioner and Romer during           
          1993.  We reject respondent's conspiracy theory because he                  
          offered absolutely no evidence in support of the alleged tax                
          avoidance scheme.                                                           






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