- 11 - contrary. See sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.2 Some of the receipts and invoices petitioners provided have no plausible connection to any trade or business and are clearly nondeductible personal expenses under section 262. For example, petitioners seek to deduct the cost of installing a wireless fencing system for their dog. There are also numerous other expenses which are likely personal with respect to which petitioners have provided inadequate explanations concerning their business purpose. These expenses include gasoline and car washes for petitioners’ family cars, as well as various travel expenses. Petitioners introduced into evidence groups of receipts and summaries for the travel expenses, and these summaries contained notations concerning the alleged business purpose of the travel. The notations for a July 1994 trip to Vail, Colorado, indicate that the purpose was a “Search2000 Board of Directors meeting”. However, Search2000 was not incorporated 2Sec. 7491 does not apply in this case because the underlying examination began before July 22, 1998, see Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3001(c), 112 Stat. 727, when petitioners were notified by letter dated July 16, 1997, that their application for tentative refund was under examination. We note that, had sec. 7491(a) applied, it would not have shifted the burden of proof to respondent because petitioners have not maintained adequate books and records and have not substantiated the amounts shown on their return. Sec. 7491(a)(2). The burden of proof remains on petitioners to show respondent’s determinations in the notice of deficiency to be in error. See Rule 142(a).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011