Ronnie F. Judy - Page 5

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            petitioner concerning his expenditures.  As a result of these                             
            revisions, the amounts in controversy are lower than those                                
            reflected in respondent’s original adjustments.2  The revised                             
            computations set forth below are not disputed:                                            
            Application of Funds                          1989          1990                          
            Increase in bank account balance            $4,928         - 0 -                          
            Business equipment purchased per return      4,583          $900                          
            Real estate purchased                                     61,000                          
            Loan repaid to Dewey Cowart                 11,000        31,000                          
            Personal living expenses                     4,200         5,100                          
            Taxes and insurance withholdings             2,967         1,168                          
            Expenses of estate of which petitioner                                                    
            was executor                               1,422         1,422                            
            Total funds applied                       29,100       100,590                            
            Sources of Funds                                                                          
            Adj. gross income per return                  (138)          624                          
            Depreciation per return                      5,416         3,942                          
            Loan received from Dewey Cowart               -0-         31,000                          
            Decrease in bank account balance              -0-          4,913                          
            Gifts from Mr. Judy                           -0-          1,750                          
            Total available funds reported             5,278        42,229                            
            Unreported farm income specifically                                                       
            identified                                16,383        21,698                            
            Total funds available from                                                                
            identified sources                        21,661        63,927                            
            Residual amounts in controversy              7,439        36,663                          

                  This case was tried on November 6, 1995, in Columbia, South                         
            Carolina.  One of the witnesses whom respondent subpoenaed was                            


                  2 The revisions relate to two items:  Respondent conceded                           
            that a $20,500 expenditure for the purchase of a tractor trailer                          
            occurred in 1988 rather than 1989, and that petitioner’s payments                         
            for child care in 1990 were $2,700 less than the revenue agent                            
            had supposed.                                                                             





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