- 7 - 1.446-1, Income Tax Regs. According to the explanation contained in the notice of deficiency, all of the deductions claimed on the Schedule C were disallowed for lack of substantiation. It appears that respondent now agrees, or at least does not dispute, that during 1993 petitioner paid the $10,000 fine imposed in connection with his 1984 criminal tax conviction.6 Nevertheless, petitioner is not entitled to a deduction for the payment of the fine because “no deduction shall be allowed * * * for any fine or similar penalty paid to a government for the violation of any law.” Sec. 162(f). With respect to the other deductions claimed on the Schedule C, we agree with respondent that petitioner has failed to provide adequate substantiation that the underlying expenses have been paid. At trial, petitioner presented a manila folder filled with bundles of records from 1993. The bundles include assorted photocopies of invoices, bills, statements, and receipts. There is no spreadsheet or other document that explains how these records correspond to the specific deductions claimed on the Schedule C, and petitioner was unable to provide such an explanation at trial. Many of the invoices, bills, statements, 6 According to petitioner, the $10,000 payment he made to the Government was not a “fine”, but reimbursement to the United States for the litigation costs incurred in connection with his criminal tax conviction.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011