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Petitioners had no receipts for amounts deducted as travel
expenses that were allegedly paid to their daughter in exchange
for travel coupons. Many questions were raised by the revenue
agent regarding petitioner’s reimbursements for University-
related travel, but petitioners delayed responding to those
questions, or failed completely to do so, even though an
investigation by the University focused upon those
reimbursements.17
From their presentation at the hearing, it appears that
petitioners, for the most part, consider the “general ledgers”
provided to the examining agents as adequate substantiation for
the challenged deductions. Ignoring for the moment
inconsistencies from version to version, the “general ledgers”
provided little support for the challenged deductions. The
“general ledgers” lacked meaningful descriptions of the listed
expenditures or their business purpose, and, on an item by item
basis, the amounts reported on the “general ledgers” often did
not support the amounts reported on any of the returns submitted
by petitioners. Contrary to the significance that petitioners
attribute to the “general ledgers”, in many ways, those documents
actually support respondent’s requests for additional information
for certain deductions inasmuch as entries contained in the
17 Petitioner was given the opportunity at the hearing to be
recalled as a witness to explain the nature of the University’s
investigation, but she chose not to do so.
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Last modified: November 10, 2007