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receipts determination amounts mutually agreed upon with
petitioner representing funds that Allan had diverted to fund his
drug dependency. Respondent also determined that petitioner
failed to include on his returns interest income of $138, $361,
and $15, respectively, for the 3 years in question. Petitioner
conceded the unreported interest income at trial. Petitioner
also conceded the unreported gross receipts but contends
respondent failed to allow other adjustments described below,
thus framing the principal issue before the Court.
The funeral home's gross receipts came from three sources:
(1) Payments made directly to the funeral home by the
families or relatives of the deceased;
(2) Payments received directly from insurance companies; and
(3) Payments from "Pre-need funeral contracts" that
represented the conversion of amounts previously paid by
individuals of their anticipated funeral expenses.
The practice at petitioner's funeral home was to issue
receipts only for the payments directly made to the home
described in situation (1) above. Although statements were
issued in situations (2) and (3) above, no receipts were issued
for such payments. In submitting the income and expense
information to petitioner's income tax return preparer each year,
Allan submitted only the direct payments received from customers
and did not submit the income received in situations (2) and (3)
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Last modified: May 25, 2011