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apparently lost somehow by either petitioner or respondent during
the tax examination. In lieu of these, petitioner presented a
self-created computerized “Register Report” which petitioner
testified “is a check register”. Notably, however, the Register
Report does not reflect check No. 6718's ever clearing
petitioner’s bank account. The Court asked petitioner whether
the Register Report included “all your checks?” Petitioner’s
answer was “Yes, sir. Anything hitting my bank account” during
the 2000 taxable year. Checks numbered 6717 and 6719 are shown
in the Register Report as cleared on June 12 and June 16, 2002,
respectively, but check No. 6718 is never mentioned.
In addition, petitioner claimed a Schedule C deduction for
legal fees and costs in the amount of $7,903. The parties
stipulated, as to that item, that the only issue still in
contention is petitioner’s legal fees of $1,689.65 for the case
Smyth v. Daou Sys., Inc, No. 97-CV-02013 (S.D. Cal. filed Nov. 7,
1997).7 Petitioner presented as substantiation a document
specifying the amount of the award he received, a Form W-2
characterizing the settlement as a bonus, the accompanying check
from Daou Systems for $5,918.82 ($8,000 less withholding taxes of
$2,081.18) payable to his attorney Michael Conger (Mr. Conger),
7Petitioner was employed by Daou Systems as a Senior Network
Systems Engineer / Project Manager from Aug. 1995 to Mar. 1997.
Petitioner conceded that he was not a statutory employee.
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