Stephen J. Major - Page 7

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          Unreported Income                                                           
               Gross income includes all income from whatever source                  
          derived.  Sec. 61(a).  Section 61(a)(1) specifically includes               
          income derived from compensation for services, including fees,              
          commissions, fringe benefits, and similar items.  It is required            
          under Federal law that taxpayers maintain adequate and accurate             
          tax records.  Sec. 6001; see also Jones v. Commissioner, 903 F.2d           
          1301, 1303 (10th Cir. 1990), affg. in part, revg. in part and               
          remanding T.C. Memo. 1988-373.                                              
               Petitioner does not dispute that he received $24,000 from              
          QSN during 1997 in addition to his regular salary.  Petitioner              
          instead argues that respondent mischaracterized the checks as               
          commission checks, rather than reimbursements for other business            
          expenses; namely, out-of-pocket expenditures from business                  
          dealings in Mexico with QSN’s client, McCulloch.                            
               The record consists of petitioner’s weekly expense reports             
          and currency exchange worksheets that he submitted to QSN’s                 
          headquarters for reimbursements in 1997.  We find it puzzling               
          that petitioner failed to produce credit card statements,                   
          receipts, expense records or logs, additional currency exchange             
          reports, independent testimony, or any other credible evidence to           

          penalty, we find that respondent has satisfied his burden of                
          production under sec. 7491(c) because the record shows that                 
          petitioner failed to include the income on his return.  Higbee v.           
          Commissioner, 116 T.C. 438 (2001).                                          

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