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Throughout 1998, petitioner worked as a self-employed
consultant. From time to time during that year he entertained
clients and prospective clients. To that end petitioner “picked
up the tab” for various meal and entertainment expenses.
Petitioner “generally would keep just some loose papers or
notices” evidencing these expenses, and he “would send them to
[his] accountant just as records of what [he] had done.”
According to petitioner, his records for meal and
entertainment expenses for the 1998 taxable year were lost by his
accountant. Consequently, in 1999 petitioner prepared a “diary”
to “approximate as best [he] could” the meal and entertainment
expenses he incurred during 1998. Various entries made in the
“diary” on numerous dates show only the name of an individual and
an amount. The “diary” does not contain any notations describing
the business purpose of recorded expenses.
Each petitioner initially filed a separate 1998 return.
Stephanie Thibodeaux’s return was timely; petitioner’s return,
filed February 22, 2000, was not.2 On December 19, 2001,
respondent received petitioners’ joint Form 1040X, Amended U.S.
Individual Income Tax Return, for 1998 (the joint return). The
joint return includes a Schedule C for petitioner’s consulting
2 The parties stipulated that petitioner’s 1998 return was
filed Feb. 22, 2000. The notice of deficiency suggests his
return was filed Feb. 20, 2000. The difference is without
distinction and need not be reconciled.
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Last modified: May 25, 2011