Ragnhild A. Westby - Page 9

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               During the years at issue, petitioner maintained banking               
          relationships with at least two financial institutions–-ANB at              
          which petitioner maintained two checking accounts (Nos. 302-733-1           
          and 109-070-3), a payroll account (No. 109-139-6), and several              
          personal and commercial loan accounts; and First Bank at which              
          she maintained a checking account (No. 2624676067).6                        
          IV.  Respondent’s Review of Petitioner’s Business Records                   
               Although petitioner produced her business records (ledger              
          books, checks, cash receipts, credit card receipts, credit card             
          statements, and other documents) to the revenue agent in                    
          connection with the examination of her returns for 1987-90, the             
          revenue agent failed to examine and/or utilize petitioner’s                 
          records for 1987, 1989, and 1990 to ascertain the accuracy of the           
          income and expenses claimed on petitioner’s Schedules C for those           
          years.  With the possible exception of 1988, for which a portion            
          of petitioner’s Schedule C deductions was allowed, respondent               
          issued the notices of deficiency without examining petitioner’s             
          business records.                                                           
               A.  Schedule C Income                                                  
               Sometime after respondent issued the notices of deficiency,            
          respondent undertook to reconstruct petitioner’s Schedule C                 

               6The record does not disclose when the accounts were opened            
          and does not include complete records for the accounts.                     
          Petitioner also maintained other financial accounts during the              
          years at issue, but the record contains minimal information                 
          concerning them.                                                            





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