Rafael M. and Rosario Gutierrez - Page 9

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          from the sale of a market in Mexico to petitioner’s brother.                
          They further contend that they have complied with the applicable            
          laws and regulations with respect to that sale in Mexico.7                  
          Therefore, according to petitioners, the excess amount in                   
          question is not taxable in the United States pursuant to the                
          Treaty, as well as by virtue of sections 871 and 992.                       
               Petitioners presented no admissible evidence to support any            
          of their contentions.  Their testimony is without merit because             
          it is inconsistent, incoherent, and unreliable.  For example,               
          petitioner testified that his brother still owed him in 1998                
          approximately $130,000 from the purported sale.  He also                    
          testified that in 1998 he brought from Mexico $175,000, which is            
          a larger amount than what his brother allegedly owed him at that            
          time.  Because petitioners claim no other source of the excess              
          amount besides the sale of the market to petitioner’s brother,              
          these two parts of testimony are irreconcilable.                            
               Furthermore, if anything, petitioners’ testimony supports              
          the conclusion opposite from their contentions.  For instance,              
          although petitioner testified that he paid taxes in Mexico, he              
          also stated that he did not report income from sale of the                  
          business to his brother to any authority in Mexico.  Whatever               
          legitimate explanation may exist for that fact, it certainly                


               7 Petitioners state that they owed no taxes on the                     
          transaction because they sold the market at its cost.                       





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