Sept 19, 2009

Philip J.
PO Box 1186 Daleville, Alabama

David M. McCallum
Attorney (Greensboro, Group 1)
Department Of The Treasury
320 Federal Place, Room 509
GREENSBORO, NORTH CAROLINA 27401

RE: Philip J. vs. Commissioner of Internal Revenue Docket # 1680xxx

Dear Counsel

Petitioner above-named hereby submits his letter as a true approximation of his unreimbursed business expenses, deductions, credits, etc.

1. This reconstruction is based upon the Cohen Case. The Circuit Court of Appeals ruled in Cohen v. CIR, 266 F2d 5 (1959): that in tax court, taxpayer can use reasonable figures, instead of figures conjured by the IRS that cannot be correct. Taxpayer can also reconstruct lost paperwork to substantiate this deductions and business expenses.

The 9th Circuit Court ruled in Cohen v. CIR, 266 F 2d 5(1959):

''We think our only proper course is to approach the problem indirectly by analysis of the record in the light of the principles established in Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930). Our objective will be, after resolving any reasonable doubts against petitioner, to reconstruct his gross income as betting commissioner at a figure which in our judgment it would be unlikely to exceed in fact.”

2. The IRS is authorized by Congress only to collect taxes that are actually due. The Tax Court has a duty to find the taxes that are in fact owed. Petitioner has a small and unstable income, and also has unreimbursed schedule A deductions. Only the amount is unknown.

3. Petitioner due to no fault of his own does not have adequate books and records to substantiate his business expenses, deductions, etc. Taxpayer is neither a lawyer nor a CPA and has no legal or tax education training. He is a simple working person.

This citizen of this great country, Petitioner does not understand the internal revenue laws or regulations. He finds the IR code to be incomprehensible. Since he is unable to fill out his tax return, he must hire tax professionals.

4. For the tax year in question, taxpayer hired a tax professional to assist him in filing tax return. Petitioner followed the advice of his paid tax advisor who advised him to not file tax returns, and also not to keep books and records. Taxpayer faced with an incomprehensible tax system has a right to rely upon tax professionals.

5. Petitioner does not know enough about the tax code to determine if his advisor was competent or leading him astray. Petitioner does not have adequate books and records due to the advice of a tax professional that is also very unpopular with the IRS.

6. Therefore taxpayer does not have the necessary records to substantiate his business records and deductions but must reconstruct them under the Cohen rule. Petitioner is not an accountant or tax professional and did not know to keep all of his records for a specified period of time.

7. Attached is a list of unreimbursed business expenses, deductions, etc and the amounts. For the tax year 2005, Petitioner claims 116,9706 in expenses and/or deductions, etc.

8. Taxpayer is entitled to $50 (Safe harbor amount) for credit for illegal telephone tax. Taxpayer is also entitled to $200 for tax return preparation expense. Taxpayer had a dependent wife.

9. At the trial, the IRS will use only hearsay documents against Petitioner. Therefore, taxpayer should be allowed to submit an affidavit. What is good for the goose is good for the gander.

10. A deficiency determination which is not supported by some evidentiary foundation is arbitrary and erroneous. Weimerskirch v. Commissioner, 596 F.2d 358, 361-362 (9th Cir. 1979), revg. 67 T.C. 672 (1977).

11. I request an out-of-court settlement and a meeting with someone in your office to present my documents records, receipts, etc, to support the deductions, credits, business expenses, etc. For the tax years in question I have a great deal of business expenses.

Sept 18, 2009

Philip J., Pro Se

List of deductions and expenses for tax year 2005

Sub contracted out 40% 43,915.60

Office expenses: 400.00

Shipping expenses: 1200.00

Parts/cost of goods: 15,000.00

Outside Services:(as windshields install)3600.00

Health care insurance: 2,415.00

Phone expense: 1300.00

Sublet repairs(frame pulling etc.) 6,000.00 Electricity: 5000.00

Heating (propane): 1250.00

Auto expenses: 3000 @ .38/mi. 1,140.00

Towing 2500.00

Shop Supplies 2,400.00

Paint and Materials 28,000.00

Repair Equipment 650.00

Charitable donations to my church 2,200.00

Total of business deductions: 116,9706

Total net loss

Note the following:

1. From about the year 2000 to the present, Body Shops profits were falling.

2. Body shops (in this area ) only profit about 25% of their gross income in 2005.

Conclusion: I am willing to settle this out of court for the amount of $1000.00 in which I will have to borrow.