Jan and Corinne Mejnartowicz - Page 4

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                    Gross receipts                          $26,864                   
                         Less cost of goods sold            13,569                    
                    Gross income                            13,295                    
                    Less expenses:                                                    
                         Car & truck              $531                                
                         Insurance           2,298                                    
                         Legal               2,000                                    
                         Utilities           1,764                                    
                         Casual labor        1,200                                    
                         Permits                 185          7,978                   
                    Net profit                              $5,317                    
          Upon examination respondent disallowed the deductions for legal,            
          utilities, and casual labor expenses and reduced the insurance              
          expense by $1,687.  Respondent also reduced the amount of cost of           
          goods sold by $8,000.  In addition, respondent made certain                 
          mathematical adjustments that flow from the changes in                      
          petitioners’ adjusted gross income and are not in dispute.                  
          Petitioners concede the adjustments for legal and utilities                 
               Petitioner kept no journal or other books and records.  He             
          did maintain a checking account, but the canceled checks were               
          kept by his accountant who had moved to Florida and were                    
          unavailable.  Petitioner did not issue any Forms 1099 or Forms W-           
          2, Wage and Tax Statement, with regard to the deductions claimed            
          for casual labor.  While petitioner could have obtained records             
          of his payments for insurance, he did not.                                  

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Last modified: May 25, 2011