In Gaitan v. Commissioner, Javier Gaitan and Monica Gaitan owned a clothing-export business and a car-wash business. In 2006, they filed a joint income-tax return and attached two Schedule C: one for a clothing-export business and one for a car-wash business.
The Internal Revenue Service issued notices of deficiency determining that the Gaitan's were not entitled to the $134,575 amount reported on their return for cost of goods sold. The notice also determined a deficiency of $40,740 and imposed an accuracy-related penalty of $8,148.
The Tax Court upheld the accuracy-related penalty, held that the couple was not entitled to a cost of goods sold deduction for the clothing export business for lack of substantiation, and denied the car-and-truck expense deductions.
See Gaitan v Commissioner, T.C. Memo. 2012-3 (Jan.3, 2012).
Posted by Brian Spring, Associate Editor, Wealth Strategies Journal.
The Internal Revenue Service issued notices of deficiency determining that the Gaitan's were not entitled to the $134,575 amount reported on their return for cost of goods sold. The notice also determined a deficiency of $40,740 and imposed an accuracy-related penalty of $8,148.
The Tax Court upheld the accuracy-related penalty, held that the couple was not entitled to a cost of goods sold deduction for the clothing export business for lack of substantiation, and denied the car-and-truck expense deductions.
See Gaitan v Commissioner, T.C. Memo. 2012-3 (Jan.3, 2012).
Posted by Brian Spring, Associate Editor, Wealth Strategies Journal.
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