Darryl F. Royster - Page 8




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          on petitioner’s Schedules C for RBS for each of the taxable years           
          in issue on the grounds that the income was received from                   
          petitioner’s employer (IRS) as reimbursement for employee                   
          business expenses.                                                          
               As part of the examination, the IRS agent sent petitioner              
          letters on October 3, 2003, November 21, 2003, January 9, 2004,             
          January 30, 2004, and February 19, 2004, requesting documentary             
          evidence supporting his claimed business expenses.  Further,                
          during meetings with petitioner held on November 21, 2005, May 8,           
          2006, and May 25, 2006, respondent requested supporting                     
          documentation for the business expenses reported on the Schedules           
          C.  Finally, on May 31, 2006, petitioner provided respondent with           
          copies of canceled checks, invoices, receipts, and newspaper                
          articles.  Copies of these submissions are included in the                  
          stipulated exhibits received at trial.                                      
               Petitioner’s home was burglarized on or about September 11,            
          2005.  Petitioner informed respondent thereafter that files,                
          records, and information pertaining to RBS stored on petitioner’s           
          computer were taken in the robbery.  The police investigation               
          report, included as part of the stipulated exhibits, lists as the           
          only property taken in the robbery a computer and all of the RBS-           
          related receipts.  The report also concludes that there was no              
          forced entry into petitioner’s home.                                        








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