- 5 -
and 6-341787-7. Of these four accounts, the following three were
open during 1991: 1-186357-8, 1-186533-4, and 6-341787-7.
On December 4, 1989, Ming transferred $200,000 to Mr. Chu
from the Liu account number 1-186533-4. On June 29, 1990,
Mr. Chu withdrew $2,275 from his account number 1-186313-1, which
he then closed, and deposited this sum into the Liu account
number 1-186533-4. With respect to petitioners' other six bank
accounts that were open in 1990, all but one of them were open in
1991. Mr. Chu closed his account number 69-92-03115-0 during
1990.
During the subject years, Oceanfront accepted travelers’
checks in denominations of $20, $50, and $100. During 1990,
52 travelers checks in denominations of $50 and $100 were
deposited into the Liu account number 1-186357-8, and 96
travelers checks in denominations of $20, $50, and $100 were
deposited into the Liu account number 6-341787-7.
Oceanfront's records for the subject years consisted
primarily of canceled checks and a check register. Oceanfront
did not maintain a separate cash receipts journal or a sales
journal, and it did not retain the tapes from its cash register.
Respondent reconstructed petitioners' income for the subject
years by way of the bank deposits method. For 1990, respondent
determined that petitioners failed to report $669,128 of
Oceanfront's gross receipts. Respondent has since conceded that
these unreported receipts are no greater than $641,771. For
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