James J. McCarron III and Michelle McCarron - Page 8

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          Petitioner failed to provide any documentation proving that these           
          deposits were from nontaxable sources.                                      
               During 1993 and 1994, petitioner also worked for Mr. Ragnar            
          Sundstrom preparing tax returns.  Mr. Sundstrom filed Forms 1099-           
          MISC for payments he made to petitioner for services rendered.              
               During 1993, petitioner received two additional checks from            
          Mr. Sundstrom totaling $7,772.03:  Check No. 4307 for $3,000 and            
          check No. 4315 for $4,772.03 (the Sundstrom payments).  The                 
          notation on check No. 4307 states "friendship".  The notation on            
          check No. 4315 states "Bal of friendship payment".                          
               Petitioner contends the Sundstrom payments were loans, but             
          he never gave respondent any evidence or documentation to support           
          his claim.  Further, petitioner did not take any action to                  
          produce Mr. Sundstrom to testify about the nature of the                    
          payments.                                                                   
          C.  Petitioners' Deductions and Credits                                     
               Petitioners claimed itemized deductions as follows:                    

                                              1993      1994      1995                
          Real estate taxes                  $1,715    $1,687    $1,734               
          Home mortgage interest             5,237     4,866     4,337                
          Cash charitable contributions      190       310       215                  
          Noncash charitable contributions   -0-       -0-       500                  
          Total                              7,142     6,863     6,786                










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