- 6 -
Once again, we are required to distill truth from falsehood.
See Diaz v. Commissioner, 58 T.C. 560, 564 (1972). Having observed
Mr. Norton while he was testifying, we find his testimony as to the
source of the $86,155 deposit credible. We are satisfied that
there was a true debtor-creditor relationship and that this
relationship created an unconditional and enforceable obligation to
repay the moneys advanced. Consequently, we conclude that
Northridge’s gross receipts for 1993 were not underreported as
respondent maintains.
B. Cost of Goods Sold
The parties stipulated that Northridge’s cost of goods sold
for 1993 was $945,143, rather than $945,732, as reported on the
Nortons’ original and amended Schedules C. In arriving at this
amount, the auditing agent reviewed substantiating documentation.
At trial, the Nortons sought an additional $4,650 for cost of
goods sold, claiming that this amount was paid to David & Sons for
cabinets and other items. In support of this claim, the Nortons
introduced an undated invoice, as well as a copy of their check
ledger. The check ledger for February 12, 1993, indicated that a
check was made payable to “David & Sons” in the amount of $4,450.
No canceled check to show that the $4,650 invoice was paid was
introduced.
We do not believe that, in general, a party to a stipulation
should be allowed unilaterally to disregard the stipulation. Even
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011