- 4 - Schedule C reporting gross receipts of $3,615,300, cost of goods sold of $3,392,128, expenses of $208,380, and a net profit of $16,912 that was reported on their Form 1040. Respondent’s Examination Revenue Agent Emmanuel Pascual (Pascual) audited petitioners’ returns for all 3 years. Respondent’s standard procedure when examining a sole proprietorship engaged in operating a gasoline station involves a field visit of the proprietor’s home and business. Pascual drove by Mena’s and by petitioners’ home prior to contacting petitioners regarding the examination of their returns. Pascual observed that petitioners resided in a two-story home with a three-car garage and that petitioner drove a Mercedes-Benz. During the examination, petitioners consistently postponed scheduled interviews and appointments with Pascual. Pascual requested from petitioners documentation regarding their income, expenses, and cost of goods sold for Mena’s. Petitioners did not provide complete bank records, and Pascual issued summonses to obtain copies of petitioners’ personal and business bank statements, canceled checks, and deposit slips. At one point, petitioners’ representative told Pascual that petitioners had no personal bank accounts. Pascual found that petitioners did have both business and personal bank accounts, and he obtained copies of bank statements, canceled checks, and deposit slips. PascualPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011