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OPINION
I. Evidentiary Issue
As a preliminary matter, we must decide whether certain
documents respondent submitted during the trial of this case
should be admitted into evidence. At trial, respondent sought to
introduce a Form 4665, Report Transmittal, a Form 886-A,
Explanation of Items, and workpapers prepared by Revenue Agent
Wesley Bayles. Petitioner made a hearsay objection to the
admission of these documents. We reserved ruling on their
admissibility.
Respondent argues that the documents are admissible because
they were offered merely to show what information was available
and considered by Revenue Agent Bayles during the audit of
petitioner’s returns. Revenue Agent Bayles testified that (1) he
prepared these documents in connection with the audit of
petitioner’s 1987, 1988, 1989, and 1990 returns, (2) he had
petitioner’s bank records when he prepared the report, and (3)
the report reflects the explanation of adjustments made for 1987,
1988, and 1989.
A memorandum, report, record, or data compilation, in any
form, of acts, events, conditions, opinions, or diagnoses, made
at or near the time by, or from information transmitted by, a
person with knowledge, if kept in the course of a regularly
conducted business activity, and if it was the regular practice
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