Richard and Rebecca Adair - Page 5




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                                   Schedule C for the                                 
          Wages,        Roofing Business                                              
              Salaries,                     Business   Reported                      
          Year   and Tips   Gross Receipts   Expenses    Income                       
          1993   $10,905           –              –    $10,905                        
          1994*    1,400       $21,729      $22,707         10,422                    
          1995     1,535        52,359            26,763     10,193**                 
               *  For 1994, on a Schedule C-EZ relating to a separate                 
               contracting business, Richard Adair reported $10,000 as                
               construction gross receipts with no expenses reported.                 
          **  For 1995, total reported income includes $19 of                         
               interest income.                                                       

               On petitioners’ Schedule C, for the roofing business for               
          1994, petitioners listed Rebecca Adair as owner of the roofing              
          business.  On petitioners’ Schedule C for the roofing business              
          for 1995, petitioners listed Richard Adair as owner of the                  
          roofing business.                                                           
               During respondent’s audit, petitioners did not cooperate               
          with respondent’s agents, and petitioners did not provide to                
          respondent’s agents the books and records relating to the roofing           
          business.  Also, petitioners mailed to respondent letters                   
          reflecting frivolous tax protester arguments.                               
               On audit and in the notices of deficiency for the years in             
          issue, using the bank deposits method of proof and the specific             
          item method of proof for interest income earned on the checking             
          account balance, respondent determined that petitioners received            
          unreported taxable income in the following total amounts:                   








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Last modified: May 25, 2011