Dale H. Sundby and Edith Littlefield Sundby - Page 11

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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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