William S. Fairey, Jr., and Susan R. Fairey - Page 12

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          supported his charitable contribution deduction of $7,500 in                
          2000.  That letter purportedly from Special Friends thanked                 
          petitioner for his donation of golf clubs and for an                        
          advertisement placed with the organization’s newsletter and said            
          that the bill for the advertisement would be charged to                     
          petitioner’s Visa credit card in two installments of $3,750.                
               That letter was not an accurate copy of any letter from                
          Special Friends.  The letter that Special Friends sent to                   
          petitioner acknowledged his donation of golf clubs but did not              
          mention any other contribution from petitioner.  Petitioners did            
          not contribute $7,500 to Special Friends in 2000 or provide to              
          Hughs any record of Visa card payments to Special Friends.                  
               During the audit, petitioner gave Hughs inconsistent and               
          incorrect explanations of the purpose of the $27,000 payment to             
          Pekas in 2000.  He told Hughs that he paid $27,000 to Pekas in              
          2000 for investment counseling.  Petitioner also told Hughs                 
          during the audit that he paid $27,000 to Davoli in 2000 to obtain           
          a background investigation so he could qualify for appointed                
          Government service.  Petitioner told Hughs at a different time              
          during the audit that the $27,000 payments were for legal fees.             
               Respondent issued the notice of deficiency to petitioners              
          for 1999, 2000, and 2001 on January 16, 2003.                               









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