Charles R. and Dru L. Haggart - Page 5

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          goods sold were computed; it is clear that there is no                      
          documentation in support of these amounts, nor was there any                
          attempt by Mr. Poltonowicz to verify these items.  At trial,                
          petitioners and Mr. Poltonowicz were unable to explain the                  
          sources from which these items were derived.                                
               As a preliminary matter, we address Mrs. Haggart’s                     
          contention at trial that Mr. Haggart was an employee of Roman               
          rather than a self-employed independent contractor.  In this                
          context, the issue is peculiar because petitioners took the                 
          position on their tax returns that Mr. Haggart was self-employed            
          and both Mr. Haggart and respondent agree that he was self-                 
          employed.  Additionally, Mrs. Haggart did not raise the issue in            
          the petition filed with this Court.  Indeed, in the petition she            
          prayed that “Spouse seeks emancipation from taxpayer’s                      
          responsibility for self-employment taxes.”  The position taken in           
          the petition, therefore, assumes that there was a liability for             
          self-employment taxes, and certainly respondent was entitled to             
          assume this in preparing for trial.  If we were to allow Mrs.               
          Haggart to raise this issue at this late time, respondent would             
          be unfairly prejudiced.  See Toyota Town, Inc. v. Commissioner,             
          T.C. Memo. 2000-40, affd. sub nom. Bob Wondries Motors, Inc. v.             
          Commissioner, 268 F.3d 1156 (9th Cir. 2001).  Accordingly, we               

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