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petitioner regarding this $400 and do not sustain that portion of
respondent’s determination.12
Respondent conceded at trial that petitioner is entitled to
a cost-of-goods-sold allowance with respect to the foregoing
sales of $1,360.13 We conclude that petitioner has produced
documentary evidence and testimony which establish that she may
increase her cost-of-goods-sold allowance by an additional
$4,011, for a total of $5,371, with respect to goods sold to
those individuals.
The difference between the $18,300 petitioner demonstrably
received from the P.’s and from Mr. S. in exchange for
electronics merchandise provided to them and the $5,371 we have
concluded petitioner paid for those goods is surprisingly large
and reflects substantial unreported income. In making our
allowance for the cost of goods sold to the P.’s and to Mr. S.,
we have resolved doubts in favor of petitioner, even to the
12 Petitioner objected to respondent’s “specific item”
evidence for $400 of the amount received from Howard S. because
the check documenting this amount states clearly that it is for a
“ticket purchase”, whereas respondent’s determination, answer,
and pretrial memorandum all took the position that the foregoing
amount was for electronics. We advised respondent’s counsel
prior to trial that if the $400 check was intended to prove
receipt of income by petitioner from the sale of tickets,
respondent would be required to amend his pleadings. Respondent
sought no leave to amend, and we accordingly treat the $400
specific item of income from Howard S. as abandoned.
13 Although respondent contends on brief that the total
conceded is $890, he clearly conceded an additional $470 at trial
with respect to Howard S., for a total of $1,360.
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