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inviting them to attend a meeting on June 24, 2002. Petitioners
did not receive those letters because they were out of town.
Neither petitioner met with Hughs on June 24, 2002.
Petitioners never submitted any documents to Hughs relating to
2001.
4. Petitioners’ Conduct During the Examination
Susan Fairey did not meet with Hughs at any time during the
audit of petitioners’ 1999, 2000, and 2001 tax returns.
Petitioners did not submit monthly bank statements to Hughs.
Hughs obtained those records through a summons. Petitioners
never gave Hughs a history of petitioner’s Schedule C activity,
receipts for petitioners’ claimed employee business expenses, or
receipts for or explanations of the purposes of the travel, meal,
and entertainment expenses, or the other expenses deducted on
their 1999, 2000, or 2001 income tax return.
Petitioner gave Hughs a copy of a spreadsheet which shows
check No. 4089 from petitioner to Davoli as substantiation of
claimed legal and other professional expenses incurred in 2000.
Petitioners did not give Hughs any other substantiation of their
legal expenses or the dimensions of their home (relating to their
claimed home office deduction) as Hughs had requested.
Petitioner told Hughs during the audit that petitioners had
paid $7,500 to Special Friends in 2000. Petitioner gave Hughs a
copy of a letter purportedly from Special Friends which he said
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Last modified: May 25, 2011