Richard Scott Gehrs - Page 5

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          of $380.47, and an addition to tax under section 6651(a)(2) of              
          $338.20 for the 1997 taxable year.                                          
               Petitioner filed a petition on July 8, 2002.  At the time of           
          filing the petition, petitioner resided in Menlo Park,                      
          California.                                                                 
               Respondent’s Fresno Appeals Office issued petitioner a                 
          letter dated November 5, 2002, explaining:                                  
                    The reason that * * * [respondent] was looking for                
               a tax return was due to the brokerage reporting gross                  
               sales that does not include basis.  It was assumed that                
               without any verification that there was any basis in                   
               the stock, the total sales price was considered the                    
               gain.  Based on that information, * * * [respondent] is                
               required to request a tax return and if no tax return                  
               is provided or information showing a tax return was not                
               required, then * * *[respondent] would have no other                   
               choice than to consider that the sales price of the                    
               stock was the gain.  The instructions state for tax                    
               year 1997 state [sic] you are not required to file a                   
               return but you are required under Internal Revenue Code                
               Section 6001 to keep your records to show to * * *                     
               [respondent] that you are not required to file a                       
               return.  The instructions do not state that since you                  
               do not need to file a return, that you do not need to                  
               keep records.  Usually you should keep your records for                
               3 years after the due date of the tax return.  So in                   
               the case of your 1997 tax return, you should have kept                 
               your records regarding that return until 4/15/01.  The                 
               first contact by * * * [respondent] was a letter dated                 
               8/2/99.  Providing your records to the IRS, which would                
               have shown that you were not required to file a return,                
               would have resolved this case long ago.                                
          However, in the interest of settling the case, Appeals Officer              
          James E. VanGaasbeck offered to accept, without further                     
          substantiation, petitioner’s statements in his letter of December           
          6, 1999, that his gross income for 1997 was $6,113.78.  The                 






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