Royce A. Ellis - Page 15

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          examination within the meaning of section 7605, and, as a result,           
          the subsequent examination performed by Agent Daniels was in                
          violation of section 7605(b).                                               
                    SEC. 7605(b).  Restrictions on Examination of                     
               Taxpayer.--No taxpayer shall be subjected to                           
               unnecessary examination or investigations, and only one                
               inspection of a taxpayer’s books of account shall be                   
               made for each taxable year unless the taxpayer requests                
               otherwise or unless the Secretary, after investigation,                
               notifies the taxpayer in writing that an additional                    
               inspection is necessary.                                               
               The Court finds that respondent’s Ogden Service Center’s               
          request to verify the discrepancy between petitioner’s 2001                 
          return and Forms 1099 was not an examination or inspection of               
          petitioner’s books of account.  See sec. 7605(b); Benjamin v.               
          Commissioner, 66 T.C. 1084, 1098 (1976), affd. on other grounds             
          592 F.2d 1259 (5th Cir. 1979); Miller v. Commissioner, T.C. Memo.           
          2001-55.  Therefore, Agent Daniels’s examination of petitioner’s            
          2001 tax year did not violate section 7605(b).                              
          D.   Substantiation of Deductions                                           
               Respondent contends that petitioner did not substantiate the           
          reported Schedule C costs of goods sold or deductions for 1999              
          and 2001 and failed to claim or substantiate any Schedule C                 
          costs of goods sold or deductions for 2000 in an amount greater             
          than allowed by respondent.                                                 
               The taxpayer is required to maintain records sufficient to             
          enable the Commissioner to determine his correct tax liability.             
          See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.                           

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