- 4 -
$70,690 and $72,320, respectively, for 1998 and 1999. For 1999,
petitioners reported a net loss of $5,148 from the Mary Kay
Cosmetics business activity. Petitioners claimed itemized
deductions on a Schedule A, Itemized Deductions, of $39,903 and
$31,737, respectively, for 1998 and 1999.
Prior to the years in question, petitioners prepared their
own tax returns. For 1998 and 1999, they engaged the services of
a return preparer, Robin Beltran, to prepare their returns for
those years. Mr. Beltran was recommended to petitioners by
several people. In preparing their returns, Mr. Beltran did not
rely on any records or substantiating information to support the
expenses and deductions claimed on the returns. He explained to
petitioners that records were not necessary and that taxpayers
were allowed to deduct expenses based upon their income levels.
Petitioners, at one point, expressed reservations to Mr. Beltran
regarding the amounts claimed on the returns, particularly with
respect to their charitable contributions. As Mrs. Satriana
testified at trial:3
And when we looked it [the returns] I asked him, aren't you
kind of like transposing some of this stuff. I said, We
don't have 5,000-and-some-dollars' worth of cash that we've
given out. I don't have any receipts for that. I don't
keep receipts. I don't ask the church to give me anything.
3 This case is one of numerous cases heard by the Court
involving tax returns prepared by Mr. Beltran, which essentially
involve the same deductions.
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