-36-
b. Other Expenses
Petitioners argue that they have substantiated the $18,719
claimed as “other expenses” through the introduction of Exhibits
119-P and 120-P. We disagree. Exhibit 119-P was received into
evidence through the parties’ stipulation that the exhibit
reflects “documents which Petitioners contend pertain to other
expense for taxable years 1997”. Exhibit 120-P was received into
evidence through the parties’ stipulation that the exhibit
reflects “documents which Petitioners contend pertain to the bank
deposit analysis”. Together, Exhibits 119-P and 120-P have
approximately 110 pages, and the “documents” included therein
(mainly canceled checks, bank statements, and receipts) do not
persuade us that the expenses reflected therein are properly
deductible by petitioners. Nor do petitioners in their posttrial
opening brief persuade us that they have satisfied the
requirements for deductibility; petitioners’ entire argument in
brief as to this point is as follows:
The deduction taken of $18,719 has been adequately
substantiated (Exh 119-P and 110-P). Natures Touch as
a sole proprietorship during the first 10 months of
1997 was an accrual taxpayer. Expenses budgeted to
begin the Carlsbad store location were accrued by the
sole proprietorship. This is an issue that Respondents
14(...continued)
as well as her statement of any purported business meal that she
purchased on that day along with the identity of the person with
whom she dined. We give little weight to the “expense record”.
We note that the expenses reflected in many of the invoices in
Exhibit 112-P do not appear on Michelsen’s expense record.
Page: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Next
Last modified: November 10, 2007