- 18 -
None of those income tax returns contained any balance sheet
information.20 The lack of balance sheet information on
subsequent Radtam Federal income tax returns suggests that Mr.
Collins did not have sufficient detail to prepare the balance
sheets and that a note payable to Mrs. Bacon never existed.
The evidence does not support petitioners’ assertion that
Radtam owed Mrs. Bacon $319,109 in 1989, and we do not believe
19(...continued)
disregard of rules or to a substantial underpayment of
income tax if the return position has a reasonable
basis. It can also be used for disclosures relating to
the preparer penalties for understatements due to
unrealistic positions or disregard of rules.
The description of the items disclosed in Part I, General
Information, of the form was the same for each year. The
description provided was as follows: Gross receipts, Cost of
Sales, Payroll and other Expenses.
The instructions for completing Part II of the form,
Detailed Explanation, provide that a taxpayer’s disclosure must
include:
(1) A description of the relevant facts and the nature
of the controversy affecting the tax treatment of the
item, or
(2) A concise description of the legal issues presented
by these facts.
The detailed explanation provided on Radtam’s Federal income
tax returns for its fiscal years ending 1990, 1991, and 1992 was
the same for each year. The explanation provided was as follows:
“Payroll, Sales and some expenses were established by other
estimates and means. Due to certain records which could not be
reconstructed or documented.”
20The Federal income tax returns for the fiscal years ending
June 30, 1993 and 1994, also did not contain any balance sheet
information.
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