Duncan & Associates - Page 9

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          interest on Mr. Duncan’s outstanding loan balances with peti-               
          tioner during those respective years.                                       
               Respondent also determined in the notice that petitioner               
          has capital gain income of $108,919 for 1990 as a result of                 
          petitioner’s sale during that year of its business interest to              
          the Chicago Board of Trade.                                                 
               Respondent further determined in the notice that petitioner            
          understated its gross receipts for 1990 and 1991 in amounts                 
          computed as discussed below.  Respondent used the bank deposits             
          method in order to reconstruct petitioner’s gross receipts for              
          each of the years 1990 and 1991, as follows:                                
                       Explanation                  1990          1991                
          Deposits                                $729,261      $963,097              
          Nontaxable Receipts from Mr. Duncan    (100,900)     (58,780)               
          Amount Received on Sale of             (125,000)        ---                 
          Business Interest                                                           
          Repayments to Customers                   ---        (281,614)              
          Petitioner’s 1991 Check Amount          ---           40,000                
          Gross Receipts                         $503,361   $662,703[1]               
               1Due to a mathematical error, the notice determined that               
          petitioner’s gross receipts for 1991 totaled $662,903.  That                
          mathematical error shall be corrected in the parties’ computa-              
          tions under Rule 155.                                                       
          Petitioner’s 1990 return and 1991 return reported gross receipts            
          of $454,034 and $453,451, respectively.  Consequently, respondent           
          determined in the notice that petitioner had understated its                
          gross receipts for 1990 and 1991 by $49,327 and $219,452,4                  


               4The $219,452 amount by which respondent determined in the             
                                                             (continued...)           




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