Hilary Harry Sax - Page 4

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               Petitioner requested an extension of time to file a Form               
          1040, U.S. Individual Income Tax Return (return), for 1999 which            
          extension was approved to August 15, 2000.  On January 16, 2001,            
          petitioner untimely filed his return for 1999, attaching the                
          relevant Schedule C.  Petitioner prepared the return himself.  He           
          admitted it was a mistake to use the Sax-Brook name on his                  
          Schedule C because Sax-Brook was inactive in 1999 and remained              
          inactive until the time of trial.  Petitioner claimed his                   
          business activities in 1999 were those of a lawyer.                         
              Section 7491 does not apply in this case because petitioner            
          did not meet the substantiation requirements.                               
               Petitioner received payments in the amount of $11,154 from             
          the Social Security Administration in 1999.  Petitioner failed to           
          include any portion of these payments on his 1999 return.                   
               Petitioner was the president of Sax-Brook from 1994 to date            
          of trial.  On September 9, 1994, petitioner and a business                  
          associate, Mr. Robert L. Timbrook, organized the Sax-Brook                  
               Sax-Brook was created in order to manufacture and sell                 
          building panels that could be used in new home construction.  Mr.           
          Timbrook had invented a panel made of inexpensive materials to be           
          used in the construction of houses.  Because the inexpensive                
          materials would replace lumber, including plywood, used in                  
          building a house, it was projected to be cost-effective.                    

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