Colin Kelly and Sharon K. Kaufman - Page 5




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          Hart, Inc. v. Commissioner, 456 F.2d 145, 148 (6th Cir. 1972),              
          affg. T.C. Memo. 1970-335; Stein v. Commissioner, 322 F.2d 78, 82           
          (5th Cir. 1963), affg. T.C. Memo. 1962-19, or if the totality of            
          the evidence conveys a different impression, see Diamond Bros.              
          Co. v. Commissioner, 322 F.2d 725, 731 (3d Cir. 1963), affg. T.C.           
          Memo. 1962-132.                                                             
               Petitioners argue that respondent erroneously included funds           
          deposited into their trust account as income during the years in            
          issue.  The revenue agent testified in detail that only transfers           
          from the trust account and other deposits into petitioners’                 
          business or personal accounts were included in respondent’s                 
          reconstruction.  We accept this testimony, which is not                     
          controverted in any way.                                                    
               Petitioners concede that they did not maintain books that              
          would distinguish between earned fees and unearned retainers.               
          They belatedly claim that the schedules provided to the revenue             
          agent during the audit were lists of all receipts, rather than              
          lists of income received.  They argue that the requirement of               
          Texas law that they maintain retainers in a separate trust                  
          account somehow excuses their failure to keep the amounts                   
          segregated or to provide written agreements to their clients.               
          Their arguments assume, contrary to the evidence, that identified           
          amounts were shown to be clients’ funds.                                    








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