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which underlie their Federal income tax liabilities. Sec. 6001;
sec. 1.6001-1(a), (e), Income Tax Regs.
At trial, petitioner admitted that the amounts on the
Schedule C are estimates, and that he cannot provide the
supporting documents that were used to arrive at the amounts of
the expenses shown thereon. In support of their argument that
they are entitled to deductions in amounts greater than those
claimed on the Schedule C, petitioners offered and the Court
received into evidence hundreds of pages of receipts and invoices
allegedly showing various business expenditures that were grouped
into several categories corresponding to lines on the Schedule C.
The summaries of the receipts and invoices provided with respect
to each category are merely lists of receipts rather than any
type of business record maintained contemporaneously with the
conduct of the business activities--petitioner testified that
petitioners assembled these records only after the examination of
their return had begun. Petitioners did not maintain separate
bank accounts or credit cards for use in their business
activities, and the checks and credit cards that were used to pay
the expenses bear the name of petitioner or petitioner wife. We
conclude that petitioners have not maintained adequate books and
records and that they have not properly substantiated the items
claimed on their return, despite petitioners’ arguments to the
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