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information directly from Citizens Bank. Pursuant to the
summons, the bank produced petitioner's deposit records for
the months of January, November, and December 1990. After
comparing petitioner's deposits during these 3 months with
the cash amounts recorded in petitioner's cash receipts
journal, the agent found that petitioner had omitted
$127,889 of income from its 1990 return. Respondent's
agent found the following omitted amounts:
Month Omitted Amount
January $56,893
November 38,246
December 32,750
Total 127,889
Respondent's agent also found that the above-omitted
income had been posted to a liability account, account
312, characterized as a shareholder loan account, as if
petitioner's stockholders, members of the Cordes family,
had advanced funds to petitioner. Mr. Cordes had
instructed petitioner's bookkeeper to post certain receipts
as credits to account 312 and not as income. This was true
for bankruptcy collections with respect to debts that had
been written off, late charge fees related to outstanding
loans, and sundry other receipts. Mr. Cordes and his
family were able to draw upon account 312 to pay personal
expenses. Petitioner concedes that it omitted the above
amounts from its 1990 return.
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