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Meadows--Gross Income
Respondent determined that petitioner and Mr. Morris under-
reported by $10,000 their gross income for 1989 that is attribut-
able to Meadows, an S corporation. In the Form 1120S that
Meadows filed for that year, it showed $29,112 of ordinary
income. However, in the 1989 joint return that petitioner and
Mr. Morris filed, they reported income from Meadows of only
$19,112.
Petitioner contends that the gross receipts, and therefore
the ordinary income, reported in the Form 1120S that Meadows
filed for 1989 were overstated by $10,000 and that the 1989 joint
return in question therefore correctly reflected income from
Meadows of only $19,112. To support that contention, petitioner
relies on Mr. Morris' testimony and a purported reconciliation of
Meadows' gross income for 1989 that he prepared and that pur-
ported to show the amount and source of the $86,355 of gross
receipts that Meadows reported in its Form 1120S for that year.
Mr. Morris included in that reconciliation purported deposits in
the Meadows account at the Champaign National Bank of $21,000 and
$23,000 on April 6, 1989, and April 26, 1989, respectively.
According to Mr. Morris, the $23,000 deposited on April 26, 1989,
into the Meadows account at the Champaign National Bank included
$10,000 that had previously been included in a deposit of $21,000
that was made into that account on April 6, 1989.
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