- 10 - Commissioner, T.C. Memo. 1997-168; Ellis v. Commissioner, T.C. Memo. 1984-50; sec. 1.183-2(b)(1), Income Tax Regs. Mr. Sears admitted that he “had some pretty weak business practices”. Indeed, there is no indication he prepared a budget or instituted an accounting system to track revenue and expenses. Nor does it appear that he maintained a separate bank account or credit card for the activity.8 Mr. Sears also reflected poor recordkeeping practices by failing to timely file at least two Forms 941, including one that was filed more than 2 years late, and by deducting employee benefit programs expense for costs paid before Ms. McCabe was covered by the reimbursement plan. Furthermore, his failure to reimburse Ms. McCabe for medical expenses indicates he viewed his family’s funds and those of the activity as interchangeable. Mr. Sears did apply for a business license from the City of Oroville under the name “American Tax Savers” and registered the Internet domain name “americantaxsavers.com”, although he never established an Internet Web site for the activity. Mr. Sears also had a written business plan. However, the business plan consisted of a 25-page, preprinted package from RTP and a 1-page document titled “Explanation of profit potential” signed by Mr. 8 Petitioners maintained at least two credit cards, including a “Quicken Visa Business Card” in both of their names. However, it is not clear from either the account statements or the remainder of the record whether either credit card was used exclusively for the activity.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
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