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In November of 2002, a second request was made by respondent
for petitioners’ books and records.
During respondent’s audit examination, petitioners did not
provide to respondent the requested books and records.
On April 2, 2004, respondent mailed to petitioners separate
notices of deficiency for 1999 and 2000 with respect to NHUSS
Trust, RJ Pendergraft Trust, and In God We Trust. In the notices
of deficiency, respondent determined, among other things, that in
1999 and 2000 various claimed deductions (e.g., deductions
relating to purported distributions made between the trusts and
business expense deductions relating to the furniture business)
were not properly substantiated, that in 1999 and 2000 rental
income was not reported, and that in 1999 and 2000 various
charitable deductions (including the charitable deduction for the
donation of the van) claimed by RJ Pendergraft Trust were not
properly substantiated.
Also on April 2, 2004, respondent mailed to petitioners a
notice of deficiency for 1999 and 2000 relating to petitioners’
joint individual Federal income tax liabilities. Respondent
determined, among other things, that for 1999 and 2000 the
trusts’ income and expenses were to be collapsed into
petitioners’ income and expenses and that for 2000 petitioners
4(...continued)
treat petitioners’ liability for the negligence penalty with
respect to the tax adjustments relating to the three trusts as
still in issue.
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Last modified: May 25, 2011