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Kondamudi Enterprises, Inc., used to make mortgage payments on
the medical center. A fourth account at Chase Manhattan Bank
(Chase) was used to pay an equipment loan from Chase during the
years in issue.
On petitioners' income tax returns for the years 1986, 1987,
and 1988, petitioners reported on Schedule C gross receipts from
Dr. Rao's private practice of psychiatry in the amounts of
$135,162, $170,569, and $212,522, respectively. In fact, Dr. Rao
received gross receipts from his psychiatry practice during the
years 1986, 1987, and 1988 in the amounts of $175,507, $220,408,
and $259,637, respectively. Petitioners failed to report
Schedule C gross receipts from Dr. Rao's psychiatry practice in
the years 1986, 1987, and 1988 in the amounts of $40,345,
$49,839, and $47,115, respectively.
Dr. Rao's Record Keeping
Petitioner kept no books or records; he did not reconcile
his checking accounts against bank statements or check bank
deposits against his monthly bank statement. Petitioner did not
deduct outstanding checks from his checking account to determine
the amount of funds available in the checking account.
Petitioner never received any instruction in bookkeeping or
accounting in a school, nor had petitioner ever practiced with
another professional.
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