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Tax for 1998. Respondent later expanded the audit to include
their 2000 and 2001 joint returns.
During 1998, 2000, and 2001, petitioner and Mrs. Clark
maintained a joint checking account with the Veterans’
Administration Medical Center University Federal Credit Union
(VAMCU). Respondent’s tax examiner (the examiner) reviewed
petitioner and Mrs. Clark’s bank statements, including monthly
statements for the VAMCU joint checking account, and conducted a
bank deposits analysis. The examiner concluded, on the basis of
the bank deposits analysis, that petitioner and Mrs. Clark failed
to report taxable income of $9,131 for 1998 and $11,167 for 2001.
The examiner also concluded that petitioner failed to report
$37,175 in gross receipts and sales on Schedule C for 2000.
The examiner asked petitioner to substantiate the moving
expenses that he and Mrs. Clark had deducted on their 1998 tax
return. In response, petitioner gave to the examiner (1) two
checks purportedly payable to Dave’s Moving and Storage, and (2)
a summary of moving expenses purportedly from Dave’s Moving and
Storage. Petitioner fabricated these items. Dave’s Moving and
Storage did not exist. The examiner adjusted petitioner and Mrs.
Clark’s itemized deductions for 1998.
The examiner asked petitioner to substantiate the Schedule C
business expenses that he and Mrs. Clark deducted on their 2000
tax return and the unreimbursed employee business expenses that
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Last modified: May 25, 2011