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Because of lack of documentation provided during the audit,
respondent did not allow petitioner any deductions for expenses
relating to the roofing business, and respondent charged
petitioner with the above total amounts for each year as
unreported taxable income.
For each year, respondent also determined that petitioner
was liable for the fraudulent failure to file addition to tax
under section 6651(f). In the alternative, for each year,
respondent determined that petitioner was liable for the
negligent failure to file addition to tax under section
6651(a)(1).
As a protective measure, on audit of Rebecca and Richard
Adair for 1993, 1994, and 1995, respondent charged to the Adairs
the same total amounts of unreported income relating to the bank
deposits that were charged to petitioner.
OPINION
Under section 61, gross income includes all income from
whatever source derived. See Commissioner v. Glenshaw Glass Co.,
348 U.S. 426, 431 (1955). Taxpayers are required to maintain
sufficient records to allow respondent to determine their correct
Federal income tax liability. See sec. 6001. Taxpayers with
income above the exemption amount are required to file Federal
income tax returns. See sec. 6012.
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Last modified: May 25, 2011