Bill McDonald - Page 22

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          serving than their testimony that McDonald was to receive no more           
          than $6,000.  Based on the evidence, including the flow of funds            
          between petitioners and petitioners’ family members, we hold that           
          the 37 percent to 63 percent ratio determined in the statutory              
          notices is the best approximation of petitioners’ partnership               
          arrangement to share profits and losses.                                    
               Payments From Gold to Petitioners--Respondent determined               
          that the 1989 payments by check, totaling $8,774 for McDonald and           
          $23,671 for Maynard, from Gold were income to petitioners and               
          should have been reported.  Gold also paid for insurance for                
          petitioners and some of their family members, for which                     
          respondent did not make a determination or adjustment to                    
          petitioners’ 1989 income.                                                   
               Petitioners contend that a part of the amounts paid by Gold            
          represented a $250 monthly automobile allowance and that the                
          remainder, whether received and cashed by McDonald or Maynard,              
          was Maynard’s funds.  In that regard, Maynard testified that all            
          of these check payments from Gold, both for automobile and                  
          otherwise, are either income or expense reimbursement to him,               
          with the exception of the $250 per month automobile allowance               
          from Gold to McDonald.                                                      
               With respect to McDonald’s automobile expenses, McDonald did           
          not submit any records or documentation to Gold contemporaneously           
          with the monthly payments during 1989.  For purposes of trial,              
          McDonald submitted documentation reflecting over $3,000 for                 
          automobile expenses, including gasoline charge receipts, repair             

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