Bill McDonald - Page 10

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          determined that the average 1989 return preparation fee was $482            
          for an individual return, $1,400 for a corporate return, and                
          $1,250 for a partnership return.  In his reconstruction, Pease              
          also accounted for the fact that some returns were prepared                 
          gratuitously.  Pease determined total 1989 fees of $192,201.                
          Based on information provided by petitioners during trial                   
          preparation, respondent conceded on brief that total combined               
          reconstructed 1989 fees were $185,128.                                      
               To determine M&M’s income for 1989, deposits into Gold’s               
          Merchants Bank account for the first 7 months were eliminated in            
          the total amount of $33,388 because Gold had reported that amount           
          for its taxable year ended July 31, 1989.  No adjustment for                
          Merchants Bank deposits was made for the last 5 months of 1989              
          because petitioners did not provide income and accounts                     
          receivable records for that period.  There was no consistency               
          about which entity prepared a particular client’s return (it                
          would indiscriminately vary between M&M and Gold from year to               
               Petitioners, in their respective 1989 income tax returns,              
          did not report the $250 monthly payments for automobile expenses            
          received from Gold during 1989.  Petitioners reduced the amount             
          of the Merchants Bank deposits reported in Gold’s income by the             
          amount petitioners paid for automobile expenses.  Petitioners did           
          not submit any documentation to Gold in support of their                    
          automobile mileage or expenses for 1989.  Maynard conceded that             
          the 1989 automobile reimbursement received from Gold was income             

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