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ending inventory corresponding with the amount reported on the
Schedule C. The amount shown as ending inventory ($221,908) was
carried forward on other returns, including an amended return for
2000 filed for Stejskal Enterprises Trust in July 2004.
Audit of petitioners’ individual returns and the returns for
the various trusts commenced in 2003. Petitioners declined to
meet with the Internal Revenue Service agent. The agent met with
petitioners’ daughter-in-law, Bonnie Stejskal, and Janet S.
Wilkerson (Wilkerson), the certified public accountant who
prepared returns for petitioners and for the trusts. Bonnie
Stejskal signed the 1999 Forms 1041 for Stejskal Enterprises
Trust and Bioactive Kansas Trust.
Among the adjustments to petitioners’ income made in the
notices of deficiency was to reduce purchases by Stejskal
Enterprises Trust to $397,480 and, consequently, to reduce cost
of goods sold to $347,179.
OPINION
Paragraph 10 of the stipulation that was filed at the time
of trial set forth that “Petitioners concede that they bear the
burden of proof under I.R.C. sec. 7491 on all income, expense,
and deduction issues to be tried.” Petitioners also conceded the
negligence penalty under section 6662 and the addition to tax for
failure to file timely under section 6651(a)(1). The issues for
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