- 40 -
readings that Mr. Katerelos ignored in calculating the amounts of
gross receipts of NDV that petitioners reported in their returns
for those years, they also listed transactions that increased the
grand total maintained by the cash register.
By analyzing the cash register tapes that Mr. Katerelos
saved for 1987 through 1990, respondent was able to ascertain the
number of missing transactions that did not appear on any of the
cash register tapes that Mr. Katerelos saved for those years and
the Z reading differences in grand totals. Respondent determined
that the amount of any such Z reading difference, less (1) the
amount of gross receipts recorded by Mr. Katerelos in the gross
receipts journals for a particular day and (2) any adjustments
for amounts treated as overrings or shortages of cash for that
particular day, constituted the amount of daily gross receipts of
NDV that Mr. Katerelos was required to, but did not, report in
petitioners' returns for each of the years 1987 through 1990.34
The amount of daily gross receipts of NDV that Mr. Katerelos
had recorded in the gross receipts journals for a minimum of 650
of the 1,440 days throughout the period 1987 through 1990 on
34 The amounts that respondent determined constituted additional
gross receipts of NDV that Mr. Katerelos did not report in
petitioners' returns for 1987 through 1990 included sales tax
that petitioners collected on sales by NDV. Petitioners do not
argue that respondent's determinations of the amounts of their
underpayments for those years should be reduced by the amounts of
sales tax included in the unreported gross receipts determined by
respondent, presumably because petitioners did not pay any sales
tax that they collected on unreported transactions to the appro-
priate local tax authorities.
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