Bob J. & Ernestene Sams, et al. - Page 6




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          have either been expressly conceded by either respondent or                 
          petitioners or abandoned by petitioners.                                    
                                       OPINION                                        
               Petitioners contend that respondent improperly used the                
          premium amounts reported to the Oklahoma Insurance Department               
          rather than using the bank deposits to determine Carter Bonding’s           
          gross receipts for 1994 and 1995.  Petitioners argue that they              
          collected only approximately 45 percent of the bond premiums                
          charged, which were the amounts reflected on the face of the                
          bonds written and the amounts reported to the State authority.              
          They failed to produce the accounts receivable records that                 
          allegedly supported these contentions, blaming, at various times,           
          Sullivan and another employee of Carter Bonding.  At trial,                 
          Sullivan belatedly produced a handwritten journal of doubtful               
          authenticity.  Based on our observation of the witnesses and                
          review of the entire record, we cannot accept petitioners’ claim            
          that the uncollected premiums during the years in issue                     
          approximated $65,000 in 1994 and $100,000 in 1995.                          
               Respondent was entitled to use the reports filed with the              
          Oklahoma Insurance Department to reconstruct Carter Bonding’s               
          income in the absence of adequate books and records.  See United            
          States v. Gosnell, 961 F.2d 1518, 1520 (10th Cir. 1992); Webb v.            
          Commissioner, 394 F.2d 366, 371-372 (5th Cir. 1968), affg. T.C.             
          Memo. 1966-81;  Meneguzzo v. Commissioner, 43 T.C. 824 (1965).              






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