- 11 -
$790,247.5 Although respondent’s method of computing gross
receipts was not error free, respondent was 75 percent accurate
in the determination in the notice of deficiency using
petitioner’s books and records.6 After respondent filed his
answer, petitioner and third parties provided documents to
respondent that led respondent to adjust the computation of
income. Respondent had a reasonable basis in law and fact in
relying on petitioner’s records in determining the deficiencies.
Petitioner argues that respondent was not substantially
justified because respondent should have used the bank deposit
method in his determination rather than relying on the redbook.
Petitioner further asserts that respondent’s agent misconstrued
the redbook. According to petitioner, the only reason respondent
sought to substantiate the gross receipts reported, and in the
case of 1994, not reported, was respondent’s vendetta against
petitioner. In essence, petitioner refutes the accuracy of his
own books and records. Petitioner repeatedly emphasizes that
respondent was not substantially justified because respondent did
not verify gross receipts through another method. We reject
5 We do not address 1991 since respondent employed the
method (bank deposits) which petitioner argues respondent should
have used.
6 The notice of deficiency determined gross receipts for
1992 through 1994 of $790,247. The parties agreed that, under
the bank deposits method, petitioner failed to report gross
receipts of $591,358 for those years.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011