Tommy Owens, Jr. and Dawn R. Owens - Page 12




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          their return for each such year.                                            
               With respect to the Schedule C car and truck expenses, for             
          each of the years at issue, petitioners provided their return               
          preparer with the amount of business miles that they claimed they           
          had driven during each such year, and that return preparer used             
          the standard mileage rate to determine the amount of the deduc-             
          tion for such expenses that petitioners claimed in Schedule C of            
          their return for each such year.                                            
               In Schedule E for 1993, 1994, and 1995, petitioners reported           
          rental income from the Toledo rental property of $4,000, $5,318,            
          and $7,397, respectively, and rental expenses from that property            
          of $6,668, $6,330, and $10,239, respectively.                               
               In the notice, respondent used an indirect method, the so-             
          called source and applications of funds method, in order to                 
          determine whether petitioners had unreported Schedule C gross               
          receipts for any of the years at issue.  That was because peti-             
          tioners had not maintained adequate records for any of those                
          years.  Respondent derived all of the amounts that respondent               
          used in applying the source and application of funds method with            
          respect to each of the years at issue from one or more of the               
          following sources:  Petitioners’ joint return for each such year,           
          petitioners’ bank statements for each such year, petitioners’               
          monthly listings for each such year, and petitioners’ oral                  
          statements made to respondent’s revenue agent who conducted the             






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Last modified: May 25, 2011