Michael and Penny Rhodes - Page 13

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          testimony at trial.  Petitioners’ car and truck expenses were not           
          properly substantiated under the cited legal authority.                     
               On the other Schedules C of the tax returns for 1994 and               
          1995, petitioners deducted car and truck expenses, supplies,                
          insurance, office expenses, and utilities for an Amway activity.            
          Ms. Rhodes was also responsible for all record keeping for this             
          activity.  Petitioners deducted car and truck expenses of                   
          $1,672.43 and $6,830.70, respectively, for 1994 and 1995.  The              
          extent of the records substantiating the mileage reported for               
          Amway trips was a total mileage number listed at the top of                 
          monthly calendars.  On Ms. Rhodes’s monthly calendars for 1995,             
          she listed 27,135 miles driven in support of the Amway activity             
          but only reported 22,769 miles on their 1995 return.  Similarly,            
          Ms. Rhodes’s monthly calendars for 1994 listed total mileage of             
          10,239.7; however, only 5,767.4 miles for travel was reported on            
          their 1994 return.  Ms. Rhodes offered no explanation for the               
          discrepancies at trial.  In addition, Ms. Rhodes’s records for              
          the Amway activity were as vague as the records for Keepsake.               
          When Ms. Rhodes went out to recruit distributors, she would                 
          simply write “Prospecting Day” and a list of first names with               
          mileage amounts beside them.  She could offer up no more                    
          specifics on people or locations; however, Ms. Rhodes claimed she           
          had turned over a log book containing specific records to the               
          examiner.  The examiner testified that a log book was never                 

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