James J. McCarron III and Michelle McCarron - Page 10

                                        - 9 -                                         
          substantiate them and failed to establish that the amounts were             
          expended for a business purpose.                                            
               Petitioners knew respondent had questioned their                       
          documentation of expenses in prior years.  Here, petitioners                
          failed to respond to documentation requests via the IDRs and did            
          not present any evidence at trial to demonstrate their                      
          entitlement to additional deductions on their returns.                      
               For each of the years in issue, petitioners also claimed               
          earned income credits for their two children of $602 in 1993;               
          $1,506 in 1994; and $1,860 in 1995.  Respondent determined                  
          petitioners were not eligible to claim these credits, and                   
          petitioners knew respondent had denied their claimed earned                 
          income credits in prior years.                                              
          D.  Additions to Tax and Penalties                                          
               Respondent determined that petitioners are liable for                  
          additions to tax under section 6651(a)(1) for failure to file               
          timely their tax returns for 1993 and 1994.  For each of the                
          years in issue, respondent also determined that petitioners are             
          liable for an accuracy-related penalty under section 6662(a).               
                                     Discussion                                       
               Respondent's determinations in the notice of deficiency are            
          presumed correct, and generally, petitioners bear the burden of             
          proving that respondent's determination of income tax                       








Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011