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In passing, we note the stipulation of the parties that
the ending deferred interest as calculated by respondent
in the amount of $3,091,395.88 should be increased by
$437,800. We also note the stipulation that the earned
interest as calculated by respondent in the amount of
$3,084,170 should be increased by $295,200. In this
opinion, we shall continue to refer to the amounts
originally calculated by respondent and used in the notice
of deficiency in order to avoid confusion.
Based upon the agent's analysis, respondent determined
that petitioner's interest income had been understated in
the amount of $3,084,179.12. Respondent also determined
that petitioner's interest income had been understated by
the difference between the aggregate deferred interest
computed from the ledger cards as shown above, $6,175,575,
and the deferred interest shown on petitioner's books and
records, $7,772,543, or $1,596,968. Accordingly,
respondent determined that petitioner's interest income
had been understated in the aggregate amount of $4,681,147
(i.e., $3,084,179 plus $1,596,968).
During the audit, respondent's agent asked Mr. Cordes
to provide certain information pertaining to petitioner's
bank deposits at Citizens Bank in Lawton, Oklahoma.
Mr. Cordes refused the agent's request. Accordingly, the
agent issued an administrative summons to obtain the
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Last modified: May 25, 2011