Gary Gealer - Page 10

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          expenses were ordinary business expenses or constructive                    
          dividends because of the inadequacy of the record, we could find            
          that the expenses were for the benefit of the taxpayer.  Halpern            
          v. Commissioner, supra; Donnelly v. Commissioner, supra.                    
               It is well established that taxpayers must keep permanent              
          records sufficient to establish gross income, deductions, or                
          other matters required to be shown on the return.  Sec. 6001;               
          sec. 1.6001-1(a), Income Tax Regs.  In this case petitioner took            
          the records of The Fourth Dreamer and would not give them to                
          respondent, even after respondent made requests and filed two               
          summonses.  While petitioner contends that he offered to give the           
          records to respondent, the offers to provide the records were               
          contingent on petitioner’s receiving information that respondent            
          believed petitioner was not allowed to receive under section                
               Because The Fourth Dreamer could not substantiate the                  
          expenses as ordinary and necessary business expenses, respondent            
          was justified in contending that the expenses were not made for             
          business purposes.  Donnelly v. Commissioner, supra.  It was not            
          unreasonable for respondent to determine that if the expenditures           
          were not for business purposes, then the expenditures probably              
          inured to the benefit of the two shareholders equally.                      
          Respondent based that determination on the general principle that           
          a taxpayer who fails to produce evidence within his possession              

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