Dennis E. Runkle and Debra A. Runkle - Page 33

                                       - 33 -                                         
          B.  Expenses Beyond Those Allowed in Deficiency Notice                      
               Mr. Runkle has been a self-employed insurance salesman since           
          1986, and, as previously discussed, Mr. Runkle refused to                   
          cooperate with respondent during the examination for the years              
          1991, 1992, and 1993.  Lacking his cooperation, respondent                  
          determined Mr. Runkle’s net income for insurance-related sales              
          from third-party information of deposits and checks obtained                
          pursuant to third party summonses.  As to expenses for Mr.                  
          Runkle’s insurance-related activities, respondent determined                
          deductions based on insurance-related expenses Mr. Runkle claimed           
          on petitioners’ income tax returns for 1988, 1989, and 1990.                
          From this analysis, respondent determined that Mr. Runkle was               
          entitled to deductions against self-employment insurance income             
          at the rate of 19.2 percent.                                                
               Mr. Runkle argues that, despite not having any documents to            
          substantiate his expenses, he is entitled to deductions at the              
          rate of 52.6 percent based on what he claims is an industry                 
          average.  We are thus asked to decide whether Mr. Runkle is                 
          entitled to insurance-related expenses in excess of the amounts             
          that respondent allowed in the deficiency notice.                           
               We begin with two fundamental principles of tax litigation.            
          First, as a general rule, the Commissioner’s determinations are             
          presumed correct, and the taxpayer bears the burden of proving              

Page:  Previous  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  Next

Last modified: May 25, 2011