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that any amount more than 53,643.00 for 1989 and -0- for
1990 was for an ordinary and necessary business expense,
or was expended for the purpose designated."
At trial, petitioner was not able to identify the
amounts reported as returns and allowances on his 1989 and
1990 returns. Although petitioner's Schedules C for 1989
and 1990 report returns and allowances of $103,784 and
$97,854, respectively, he introduced documents that show
aggregate expenditures of $118,817.83 in 1989 (including
the payment of $53,643 to Hackett & Co. that respondent
allowed) and $103,349.71 in 1990. Petitioner failed to
offer an acceptable explanation for these discrepancies.
According to petitioner, the subject payments can be
grouped into three categories: (1) Direct refunds to
clients and unreimbursed payments on behalf of clients to
the Internal Revenue Service and to State tax authorities;
(2) payments on behalf of one client for which petitioner
was reimbursed; and (3) payments to clients for the
purchase of supplies and services. Petitioner refers to
the payments in the first category as "direct payments"
and for convenience, we will do the same. The following
is a list of the payments that petitioner claims as
"returns and allowances" for each of the years at issue.
The list shows the check number, date, payee, and amount
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