- 7 - (1) Employee benefits $97,212 (2) Payroll taxes 578,441 (3) Outside services 104,592 (4) Rent/lease Vehicles/machinery/equipment 187,004 (5) Depreciation and sec. 179 expense 407,075 These disallowed amounts are the amounts that petitioner claimed in the referenced categories on his Schedule C. E. Substantiation Perez, no later than September 11, 2006, acknowledged errors in every category of expense claimed on petitioner’s Schedule C with the possible exception of depreciation. Neither Perez nor petitioners kept books and records of expenses of the concrete business for 2001 that reflected the deduction amounts claimed in the categories listed on petitioner’s 2001 Schedule C. F. Financial Statements Perez prepared financial statements that she knew were inconsistent with petitioners’ 2001 tax return, which she had prepared. The financial statements made petitioner’s business look more profitable than it appeared on his Schedule C. The 2001 profit and loss statement purporting to show petitioners’ 2001 net income from the concrete business was intended to be used to obtain a license in Nevada and showed $999,648 more in net income than the net income reflected on petitioner’s Schedule C.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007