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their transfer to Appeals request indicates that petitioners feel
that respondent's position on the adjustment was not reasonable
in fact based upon their statements to respondent.
As to that argument, respondent asserts that it was
incumbent upon petitioners to substantiate their entitlement to
the items claimed. It is reasonable, according to respondent,
not to concede an adjustment until he has received and verified
adequate substantiation for the items in question. He therefore
concludes that as to the stated adjustment, his position was
reasonable when taken and appropriately conceded when
substantiation was provided to Appeals.
Taxpayers are required to maintain books and records in
accordance with rules and regulations prescribed by the Secretary
of the Treasury. See sec. 6001. Generally, taxpayers must keep
records sufficient to establish gross income, deductions, or
other matters required to be shown on the return. See sec.
1.6001-1(a), Income Tax Regs.
Petitioners' request for transfer to Appeals argues that the
Code does not require an employer to indicate that an employee is
a statutory employee and that petitioners sent the Commissioner a
letter describing petitioner's duties. Regardless of what
responsibility petitioner's employers may have had, it was
petitioner's responsibility to verify her entitlement to report
income and deductions on Schedule C. The Forms W-2 attached to
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Last modified: May 25, 2011