Ernest L. and Kathleen Newsome - Page 7

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            petitioner turned in a "stop", he turned in the ledger receipts                            
            for that subscriber.                                                                       
                  During the years in issue, petitioners maintained a joint                            
            personal checking account.  Petitioner did not maintain a                                  
            separate account for his newspaper delivery service.  During the                           
            years 1991 and 1992, petitioners deposited $25,535.97 and                                  
            $24,030.84, respectively, into the joint account.  The sources of                          
            the deposits were not specifically identified, but most likely                             
            included the net wages earned by Kathleen Newsome during those                             
            years, unemployment compensation paid to one or both of the                                
            petitioners, and on occasion earnings attributable to one of                               
            their children.  Checks that petitioner received from the Star                             
            Telegram were also deposited into this joint account.                                      
            Considering the amounts of the specific deposits it appears that                           
            few consisted of cash.  Petitioner did not make any payments to                            
            the Star Telegram with checks drawn on this joint account.                                 
                  In addition to items not in dispute, the Schedules C                                 
            relating to petitioner's newspaper delivery service business                               
            included with petitioners' 1991 and 1992 Federal income tax                                
            returns reflect the following:                                                             
                                                1991                 1992                              
            Gross receipts or sales             $21,000           $21,500                              
            Cost of goods sold                  3,329             2,905                                

            Included in the computation of cost of goods sold for each year                            
            were amounts for materials, supplies, and labor.  No portion of                            

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