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Milwaukee area. Rather, they were representatives of Japanese
companies located in Japan and San Francisco. Petitioner
frequently called these acquaintances in Japan and developed
friendships with them.
C. Maintenance of Petitioner’s Business Records
Petitioner used binders or folders to collect receipts for
various expenses. For instance, all cleaning expense receipts
went into one folder, and all meal receipts went into another
folder. At the end of the year, petitioner gathered all her
receipts for a given category or expenditure, ran a tape total,
wrote the total on a piece of paper, and entered the tape total
amount on a line on the Schedule C that closely related to the
expense. Expenses were paid through a business checking account,
petitioner’s personal checking account, and petitioner’s personal
credit card. Petitioner also kept track of receipts paid by
“petty cash”. All categorization of business expenses was made
at the time petitioner placed the receipts into the respective
folder.
Petitioner prepared her Federal income tax returns for the
years in issue. She did not seek or obtain advice from a
professional tax preparer or anyone else relative to the
accounting or bookkeeping of her business.
On Schedules C attached to her 1991, 1992, and 1993 Federal
income tax returns, petitioner reported gross receipts of
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