- 19 -
the MDR audit had commenced. Mr. McAllister testified that the
loans were all made in cash and were made from a cash hoard of
$25,000, checks for cash from his bank accounts, and cash loans
he received from an individual Mr. McAllister initially referred
to simply as "Red". Mr. McAllister refused to identify who Red
was when he spoke with Ms. Berg. At trial, Mr. McAllister denied
keeping Red's identity a secret from Ms. Berg. The canceled
checks to cash were not offered as evidence. No documentation of
any loan from Red was put into evidence, and although Mr.
McAllister claims he paid Red's estate8 back by check, the
canceled check also was not offered into evidence. Mrs. McGirl
did not testify concerning the alleged loans.
In summary, Mr. McGirl's explanation of the unreported gross
receipts is that $32,000, $30,500, and $7,000 for the years 1989,
1990, and 1991, respectively, are amounts lent to him by Mr.
McAllister to purchase auction items. Since the cash remaining
after an auction trip was allegedly deposited into the business
checking account, Mr. McGirl maintains that total deposits
overstate income by the amount of the loans.9 Therefore, Mr.
8 Red is apparently deceased.
9 Mr. McGirl testified: "Well, as I mentioned before, an ideal
trip would be to come back empty-handed. Unfortunately, you
know, I have got a garage full of equipment. I got my basement
full of equipment. I have got - - a friend of mine's garage is
full of equipment." Even if Mr. McGirl's testimony is believed,
he could not deduct the cost of equipment purchased until it was
sold. Mr. McGirl testified that he was in the business of
selling used restaurant equipment and that he used the loans to
(continued...)
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