Ramiro and Maria Martinez - Page 9

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          petitioners received the unreported income as mere conduits                 
          without a claim of right.                                                   
          A.   Mr. Martinez                                                           
               Mr. Martinez testified that he split the money he received             
          from the third-party payers with other workers because the                  
          workers “had no formal ID or any papers to cash their money, and            
          so * * * [I] took the check * * * [myself] and * * * [I] cashed             
          it for them.”  Mr. Martinez provided inconsistent testimony,                
          however, as to whether the workers worked for him or with him,              
          the number of workers he paid and the amounts he paid them, and             
          the amounts he kept for himself.  Mr. Martinez also presented no            
          documentation supporting his alleged division of the money he               
          received or the amount he reported on his Schedule C-EZ, and he             
          provided no documentary evidence that he was obligated to divide            
          the money with other workers.                                               
               One of the men who worked with Mr. Martinez during 2001,               
          Gustav Ortiz (Mr. Ortiz), testified that Mr. Martinez gave him              
          “about a thousand for the Life job”.  Although Mr. Ortiz did not            
          report the income on a Federal income tax return and did not have           
          any documentation to support his testimony, we shall accept his             
          testimony made under oath, and we shall allow Mr. Martinez a                
          deduction of $1,000 for wages paid to Mr. Ortiz.                            
               Because of Mr. Martinez’s vague and inconsistent testimony             
          and the lack of credible evidence in the record, we conclude that           

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