John Weller Wood, Jr., and Magdalena Frances Wood - Page 20

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               Respondent determined that petitioner’s profits from his               
          consulting business should be increased by $24,016 for 1994,                
          $7,037 for 1995, and $13,094 for 1996, consisting of omitted                
          gross receipts and disallowed claimed business expenses.                    
               In addition to compensation for his consulting services,               
          petitioner received reimbursement from his clients for expenses.            
          The reimbursements were not included in the compensation reported           
          on Forms 1099 issued by the clients but were deducted by                    
          petitioner on the consulting business Schedules C.  Petitioner              
          did not keep accurate records of his reimbursed expenses.  The              
          invoices he submitted to the clients did not match deposits made            
          into his bank accounts.  During the audit, petitioner identified            
          certain deposits as amounts he received from clients for services           
          and reimbursed expenses (the consulting business deposits).                 
               In computing the gross receipts from petitioner’s consulting           
          business, respondent used the specific items method; i.e., the              
          consulting business deposits.  The consulting business deposits             
          totaled $83,966 in 1994, $56,066 in 1995, and $63,651 in 1996.              
          At trial petitioner offered no evidence to establish that the               
          deposits were not amounts paid to him by his clients or were                
          nontaxable amounts.  We find that petitioner’s gross receipts               
          from the consulting business were as determined by respondent;              
          namely $83,966 in 1994, $56,066 in 1995, and $63,651 in 1996.               








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