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The Commissioner has produced numerous paychecks issued to
petitioner by New Dimensions during the disputed pay period and
copies of petitioner’s bank statements in support of the Form
1099, but he acknowledges that several paychecks are missing.
As set forth below, the Court finds that the bank statements are
inconclusive, and the probative evidence supports only a finding
that petitioner earned $9,847.36 of the $12,396 reported on the
Form 1099. Accordingly, we conclude that the Commissioner has
produced sufficient evidence to show that petitioner had
unreported income in 1999 and has satisfied his burden of
production to the extent of the paychecks produced in support of
the Form 1099, but he has not completely substantiated the full
amount reported on the Form 1099.
Unreported Income
Section 61 provides that income from whatever source
derived, including compensation for services, must be included
in gross income.
From the record in this case it is plain that petitioners
must have realized that they were severely understating their
income on their Federal income tax return for 1999. Even if we
were to assume that petitioner did not receive a Form 1099 from
New Dimensions, a cursory review of his Form W-2 from New
Dimensions should have alerted petitioner to the fact that
$28,320 only represented approximately two-thirds of his total
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