Manuel Francisco Palomo and Jane Lyon Potter - Page 7

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                    undocumented testimony.  Tokarski v. Commissioner, 87 T.C. 74, 77                                                                                      
                    (1986).                                                                                                                                                
                              Smith issued a Form 1099 stating that Ms. Potter received                                                                                    
                    $3,038 in 1999.  Ms. Potter testified that she was not                                                                                                 
                    compensated by Smith for her involvement in the after-school                                                                                           
                    program.  She does, however, admit to receiving "reimbursement                                                                                         
                    checks".  Other than their testimony, petitioners have presented                                                                                       
                    no evidence to substantiate their position that the money from                                                                                         
                    Smith represented reimbursements for Ms. Potter's out-of-pocket                                                                                        
                    expenses.  Ms. Potter testified that the checks from Smith were                                                                                        
                    "to cover the cost of the advertising and the, the copying costs,                                                                                      
                    the color copying costs, of all the programs that I was trying to                                                                                      
                    run."  She claims to have given the receipts to a secretary, and                                                                                       
                    that a treasurer of the Smith PTO wrote the reimbursement checks.                                                                                      
                    Mr. Palomo testified that when preparing their Federal income tax                                                                                      
                    return he ignored the Form 1099 petitioners received because,                                                                                          
                    based on his mental calculations, "it was going to be a wash."                                                                                         
                              In a prior hearing before this Court, Mr. Palomo agreed to                                                                                   
                    do his best to provide names, telephone numbers, and addresses of                                                                                      
                    people involved with the Smith PTO.  At no point, however, did                                                                                         
                    petitioners provide the name or names of anyone at Smith to                                                                                            
                    verify their claims.                                                                                                                                   
                              Petitioners have not provided either the Commissioner or                                                                                     
                    the Court with any evidence substantiating the existence of out-                                                                                       






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