- 8 - relating to the years in issue. Petitioner pleaded guilty to illegal gambling. Thus, respondent has linked petitioner with the income-producing activity. See Berlin v. Commissioner, 42 T.C. 355, 357 (1964). As a result, petitioners must prove, by a preponderance of the evidence, that respondent’s deficiency determinations are arbitrary or unreasonable. Id. On brief, respondent contends that he used the specific item method of proof for purposes of determining petitioners’ unreported income. At trial, however, Agent Robin Britton, the agent who conducted the audit, stated that she “did not do a specific items” analysis and “basically [used Agent Gannaway’s calculations] from the plea agreement”. In response to the Court’s inquiry regarding why she did not use an indirect method of proof (e.g., the net worth method), she stated that petitioners failed to provide her with the necessary records to utilize such a method. The Court then asked Agent Britton if she had requested such records from petitioners, and she admitted that she had not. Agent Britton also admitted that she failed to verify Agent Gannaway’s report relating to the Ruritan Club by comparing his calculations with the Ruritan Club’s deposit slips. With respect to JVFD and Handicaps Unlimited, she did not review the charities’ financial reports or deposit slips for purposes of determining the accuracy of Agent Gannaway’s report. Thus, for purposes of determining the amount of income petitioner and Hood received, respondent relied solely on Agent Gannaway’sPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011