Gregory H. and Elizabeth A. Price - Page 8




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               Inadequate books and records were maintained relating to               
          funds received by the Stores for the rental of videos and                   
          relating to the partnership’s and to petitioners’ income from the           
          Stores.  Most of the records that allegedly were maintained were            
          retained only for a short period of time and were not introduced            
          into evidence.  No records appear to have been maintained                   
          relating to checks and credit card payments received for rental             
          of the videos.                                                              
               Petitioners presented no receipts, invoices, photographs, or           
          other credible evidence to establish and verify petitioner’s                
          ownership and sale of, and tax basis in, personal videos that               
          would explain the nature and source of the bank deposits in                 
          question.                                                                   
               Petitioners have failed to establish the nontaxable nature             
          of the bank deposits treated by respondent as unexplained and as            
          taxable income.  We sustain respondent’s adjustments to the                 
          partnership's and to petitioner's income based on the unexplained           
          bank deposits.                                                              

          Reimbursements for Leasehold Improvements                                   
               On March 20, 1989, the partnership leased from MC-Peoria               
          Limited Partnership (Peoria) a portion of a building for Store 5.           
          Under terms of the lease, the partnership was obligated to make             
          certain capital improvements to the building, and Peoria was                






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