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Petitioners maintained four bank accounts, two at the Bank of
Oklahoma, one at the Bank of Tulsa, and one at Sooner Federal
Savings and Loan.
During an audit of petitioners' 1991 and 1992 Federal
individual income tax returns (tax returns), the revenue agent
analyzed petitioners' bank deposits and determined that
petitioners had underreported their gross income. Petitioners
did not report any income from magic shows or band activities on
their tax returns.
After the audit began, Mr. Gardner prepared detailed
schedules of petitioners' bank deposits, including a calculation
of "total income", for the 1991 and 1992 years. Cash withheld
from deposits3 was reflected on Mr. Gardner's schedules but was
not included in the total deposits.
Petitioners maintained check registers. The deposits
recorded in petitioners' check registers do not include cash
withheld from the deposits. A summary of total deposits, as
calculated by the IRS, Mr. Gardner, and petitioners, for 1991
follows:
Respondent's Petitioners'
Audit Mr. Gardner Check Registers
Bank of Oklahoma $18,585 $18,707 $18,711
Withheld cash 2,320 --- ---
Bank of Tulsa 33,226 34,956 35,097
Withheld cash 6,930 --- ---
Sooner Fed. S&L 13,982 13,981 13,571
Withheld cash 1,416 --- ---
3 When petitioners deposited checks, they often withdrew
cash, depositing less than the amount of the check.
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Last modified: May 25, 2011