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loans. The balances of petitioner's deferred interest
account for the years 1984 through 1990, as reported on
the balance sheets attached as Schedule L to petitioner's
Federal income tax returns, are as follows:
Deferred Interest
Year Per Schedule L
1984 $5,045,821.33
1985 5,354,536.83
1986 5,799,020.10
1987 6,564,988.00
1988 7,569,183.00
1989 7,485,966.00
1990 7,772,543.00
Prior to respondent's audit, petitioner's employees had
not reconciled the deferred interest income account with
the customer ledger cards for approximately 20 years.
Mr. Robert Hinman, the managing principal of the
Lawton office of an accounting firm, was responsible for
the preparation of petitioner's tax returns from 1987
through the year in issue. At no time did Mr. Hinman
examine petitioner's method of accounting for interest
income to determine whether it was consistent with
generally accepted accounting principles, the Internal
Revenue Code, or applicable Treasury regulations.
Petitioner reported interest income for Federal income
tax purposes for the years and in the amounts as follows:
Year Amount
1984 $923,185.00
1985 1,007,549.50
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