Opinion ID: 741483
Heading Depth: 2
Heading Rank: 2

Heading: The General Business Credit Carryforward

Text: 13 The tax court disallowed, for lack of substantiation, the general business credit carryforward claimed on the Petitioner's 1989 return. The tax court's determination that the taxpayer failed adequately to substantiate a deduction is a finding of fact subject to reversal only if clearly erroneous. Norgaard v. Commissioner, 939 F.2d 874, 877 (9th Cir.1991). 14 The Petitioner claims that the tax court erred in this regard because the Petitioner submitted his many prior year tax returns along with the related partnership returns, all of which reflected the credit. Also, the Petitioner submitted pages from the ledgers of two of the sandwich shop partnerships which are purported to establish the existence of the qualified property. We reject the Petitioner's arguments. 15 Taxpayers are required to keep permanent books and records sufficient to establish matters reported in a return. I.R.C. § 6001; Treas.Reg. § 1.6011-1; Cracchiola v. Commissioner, 643 F.2d 1383, 1385 (9th Cir.1981). Treasury Regulation § 1.6001-1(a) provides that taxpayers shall keep such permanent books of account or records, including inventories, as are sufficient to establish the amount of gross income, deductions, credits, or other matters.... Moreover, [t]he books or records ... shall be kept at all times available ... and shall be retained so long as the contents thereof may become material in the administration of any internal revenue law. Treas.Reg. § 1.6001-1(e). 16 Proving matters claimed on returns by submitting the same returns is not what was intended by the tax laws, no matter how many returns the Petitioner submits. What is required is the supporting documentation of the matters claimed and the Petitioner's supporting documentation in this case is lacking. As the Commissioner points out, the Petitioner has submitted no invoices, receipts, or other evidence showing that the sandwich shop partnerships purchased qualified property. The partnership ledger entries submitted by the Petitioner are not helpful. Along with dollar figures in some instances, the entries are as follows: Restaurant Equipment, Furniture & Fixtures, Automobiles, Leasehold Imp., Auto & Truck, Furn & Fix, and Rest. Equip. These vague and generic entries fall short of substantiating the Petitioner's entitlement to the carryover credit. 17 The Petitioner's citations to I.R.C. §§ 6221 & 6222 for the proposition that the Petitioner was entitled to rely on the partnership information returns are not well founded. Both sections are applicable only to partnership tax years beginning after September 3, 1982. Pub.L. No. 97-248, § 402(a). The partnerships were defunct by early 1980. 18 In sum, the tax court did not err in disallowing the Petitioner's general business credit for lack of substantiation. 1 19