Ramon and Irma Ortiz - Page 7

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          Auto Sales and the business bank account.  This information was             
          used by Mr. Solano in preparing the Schedule C (Profit or Loss              
          From Business) for R&X Auto Sales attached to petitioners'                  
          Federal income tax returns for 1991 and 1992.  However, Mr.                 
          Solano was unaware that petitioners had a personal bank account             
          at Barnett Bank.                                                            
               In the Schedule C for 1991, Mr. Ortiz, operating as R&X Auto           
          Sales, reported gross sales of $1,384,446, cost of goods sold of            
          $1,319,153, gross income of $65,293, total expenses of $56,535,             
          and a net profit of $8,758.                                                 
               In the Schedule C for 1992, Mr. Ortiz reported that R&X Auto           
          Sales had gross sales of $3,303,511, cost of goods sold of                  
          $3,085,454, gross income of $55,755, total expenses of $46,565,             
          and a net profit of $9,190.                                                 
               On their Federal income tax return for 1991 petitioners                
          reported total taxable income of $25,049 and total tax of $2,433.           
          On their 1992 return petitioners reported total taxable income of           
          $22,163 and total tax of $2,075.                                            
               Petitioners did not report the interest they received from             
          Mr. Rodriguez ($18,000 in 1991 and $4,000 in 1992) as income on             
          their Federal income tax returns for those years.  However,                 
          petitioners provided respondent's agent with a reconstructed 1991           
          Puerto Rico income tax return that reported $18,000 as interest             
          income.  The Department of the Treasury, Commonwealth of Puerto             
          Rico, provided respondent with a certified copy of petitioners'             




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