John S. Gibson, f.k.a. John S. Mactavish - Page 4




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          Respondent computed gross receipts for 1992 through 1994 by                 
          relying on petitioner’s redbook.  Respondent reconstructed income           
          for the 1991 tax year using the bank deposits method.                       
               Petitioner timely filed a petition with this Court.                    
          Petitioner disagreed with respondent’s method of calculating                
          gross receipts.  Petitioner alleged in the petition as follows:             
               The Petitioner disagrees with each and every adjustment                
               set forth in Respondent’s notice of deficiency.  The                   
               respondent has recomputed Petitioner’s income based on                 
               a method that is so flawed and full of errors that it                  
               lacks all basis in reality.  Furthermore, since the                    
               income computation is incorrect, the penalties which                   
               are applied against the income are not appropriate and                 
               are therefore disputed.                                                
          Petitioner did not specifically identify the alleged errors made            
          by respondent in the notice of deficiency.                                  
               In his answer, respondent generally denied the allegations             
          of error.  At some point in 1999, respondent, with petitioner’s             
          assistance, calculated income for 1992 and 1993 via the bank                
          deposits method.  Petitioner provided information to respondent’s           
          Appeals officer to establish that certain deposits for 1991,                
          1992, and 1993 were not taxable.  The parties agreed to the                 
          amount of unreported gross receipts for tax years 1991 through              
          1993 shortly thereafter.                                                    
               Between May 1999 and May 2000, the parties reconstructed               
          petitioner’s income and expenses for tax year 1994.  The parties            
          also reached agreement regarding the adjustment to business gross           
          receipts for 1994.  The gross receipts per the notice of                    





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