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Petitioners have known from the outset of this proceeding
that no deductions for interest expense were included in
respondent's determinations of their taxable incomes. They have
chosen not to submit any documentation as to the amounts of
interest they (or Imperial) may have paid during the years in
issue, the fact and nature of any debt underlying the supposed
payments, the creditors to whom the interest may have been paid,
or the relationship of any such debt to the dairy farming
activities that gave rise to the income at issue here.
Petitioners point out that respondent has offered no
explanation for not allowing them to deduct the interest expense
claimed on Imperial's returns. They also note that in an earlier
proceeding before this Court, respondent agreed to a stipulated
decision that Imperial owed no additional income tax.
In demanding that respondent explain the omission of the
interest deduction, petitioners proceed from a false premise.
They are required to produce persuasive evidence rebutting
respondent's determinations of their Federal income tax
liabilities. Finesod v. Commissioner, T.C. Memo. 1994-66. They
have not done so. We therefore sustain respondent's
determinations on this issue.
Negligence
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