- 23 -
Klovanish testified that petitioner’s records for the years at
issue were in an “organized condition” and, with the exception of
1 year, corresponded with petitioner’s tax returns.21
Although we are satisfied that petitioner kept books and
records of his mining activities during the years at issue, we
are not convinced that petitioner’s record keeping represented
anything other than an effort to maintain substantiation of the
expenses claimed on his returns or that his record keeping was
businesslike. As we have stated:
The purpose of maintaining books and records is
more than to memorialize for tax purposes the existence
of the subject transactions; it is to facilitate a
means of periodically determining profitability and
analyzing expenses such that proper cost saving
measures might be implemented in a timely and efficient
manner. * * * [Burger v. Commissioner, T.C. Memo.
1985-523 (citing Golanty v. Commissioner, 72 T.C. at
430).]
See also Steele v. Commissioner, T.C. Memo. 1983-63 (checks
served as adequate substantiation for claimed expenses but were
not businesslike records).
In this case, petitioner has made no showing that he kept
the kinds of books and records that would have enabled him to
evaluate the financial condition of his mining activities. It
21Mr. Klovanish could not tie some of the numbers on
petitioner’s tax return for 1 year to petitioner’s records but
suggested that this might be due to the fact that he did not have
information from petitioner’s prior accountant to ascertain what
adjustments the prior accountant had made in preparing the tax
return.
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