Ronald and Nancy Sweet - Page 5




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          in the form of a business check upon the completion of the job to           
          cash such payment and divide the cash among the workers.                    
          Petitioner testified that it would be impossible for him to                 
          complete some of the jobs by himself due to the deadlines and the           
          diverse locations of the jobs, thereby requiring him to engage              
          the services of other installers.                                           
               Petitioner kept “several books” with information of various            
          payments made to workers.  However, he admitted that upon                   
          reviewing the books he could not “make sense of them ... they’re            
          kind of sporadic”.  The books were not brought to trial and are             
          not a part of the record.                                                   
               Petitioners filed joint Federal income tax returns for tax             
          years 1988, 1989, and 1993.  The joint returns for tax years 1988           
          and 1989 were signed by petitioners on March 1, 1997, and stamped           
          received by the Cincinnati Service Center on June 17, 1997.  The            
          1993 joint return was timely filed.                                         
               Petitioner filed separate Federal income tax returns for tax           
          years 1990, 1991, and 1992.  These returns were signed on March             
          1, 1997, and stamped received by the Cincinnati Service Center on           
          June 17, 1997.                                                              
               Respondent disallowed the following Schedule C deductions              
          and cost of goods sold:                                                     
          1988      $1,500    Schedule C - Construction Expense - paid to             
                              Joseph Sweeney                                          
          1989      20,798    Schedule C - Cost of Goods Sold - paid to               
                              Charles Hoerl                                           





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