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they believed such occurred in 1993 to the extent of $244,270,
and they label their Schedule C reporting of this amount as gross
receipts and then zeroing out that figure by an identical cost of
goods sold as “disclosure” and as “a practical solution” for
dealing with their situation.
Respondent, in contrast, characterizes this case as
involving an unrebutted admission of income coupled with a
failure to substantiate expenditures subtracted therefrom.
C. Discussion
On the record before us, we conclude that petitioners have
failed to meet their burden of establishing that LeBouef Company
was inactive and did not receive the reported amounts in 1993.
As we explain below, our conclusion rests on two primary bases:
(1) The absence of corroborating evidence beyond the testimony of
Mr. LeBouef and Mr. Aulisio that the sole proprietorship did not
operate in 1993, and (2) the presence of a bank deposits analysis
by respondent indicating income significantly greater than
petitioners’ reported income would be if the $244,270 were
eliminated.
First, Mr. LeBouef and Mr. Aulisio testified that LeBouef
Company was not active in 1993. Neither, however, proved
convincing. Mr. LeBouef was generally vague and could not
specifically identify the genesis of either the $244,270 gross
receipts or the $600 business deduction recorded on his Schedule
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