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and deposits were made into that account through October of 1986.
No records from the autobody shop were ever provided to
respondent's revenue agent. Respondent's revenue agent computed
the autobody shop's profit as follows: Total receipts of $83,544
consist of the deposits into its bank account of $71,544 and cash
expenditure for annual rent which was approximately $12,000.
From this total, Ms. Russell subtracted cost of goods sold of 40
percent. Ms. Russell computed that the partnership had a net
profit of $35,726. Michoff, Jr., retained a 25-percent interest
in the autobody shop through 1986. Ms. Russell therefore
determined that the net profit of Michoff, Jr., was $8,932, which
was 25 percent of the net profit from the partnership. Neither
Michoff, Jr., nor Michael Juarez filed a partnership return for
the autobody shop for the 1986 tax year.
Michoff, Jr., made a $10,000 cash down payment on the
purchase of property from Mr. and Mrs. Knight (the Knight
property) in the 1986 tax year. Michoff, Jr., contends that the
source of this payment was a loan from Dan Maggard. However,
Michoff, Jr., failed to prove this contention. Michoff, Jr.,
testified that these funds came from a loan, and he presented a
list of loans which he claims to have received from Dan Maggard.
This list was recently prepared by Michoff, Jr., in preparation
for this litigation. Additionally, it is only signed by Dan
Maggard and not Michoff, Jr. Mr. Maggard signed this document at
the request of Michoff, Jr. At trial, Mr. Maggard testified that
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