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activity. Petitioner’s business activities consisted of meeting
with people and trying to recruit them into the activity.
Petitioner testified that his tax return preparer, Robin Manasseh
(Ms. Manasseh), introduced him to the scheme and told him that he
could deduct expenses related to recruiting other individuals.
After getting involved, petitioner testified that he discovered
that Ms. Manasseh was being investigated and that she informed
petitioner to stop trying to recruit people until the
investigation was finished.
Petitioner had difficulty explaining how the various items
constituting the Schedule C loss related to a business activity.
He testified that he did not know of any advertising expenses,
that he had “absolutely no idea” what the $24,944 reported as
depreciation related to, that he did not know what the $8,707 in
repair service expenses related to, and that he did not make any
gifts to charities other than those listed on other parts of his
tax return. He testified that he claimed expenses related to
playing golf and meals on the basis of the advice of Ms.
Manasseh. Petitioner acknowledged that it occurred to him that
this may have been too good to be true and that he did not take
steps to investigate what he was told other than trusting the
judgment of Ms. Manasseh. Petitioner also acknowledged a large
part of food expenses were for meals that he had by himself and
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Last modified: May 25, 2011