Jerry S. Payne - Page 16

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          False Information Submitted to Banks                                        
               During 1984 through 1988, petitioner submitted falsified               
          financial documents and falsified copies of his Federal income tax          
          returns that misstated his net worth and income to various banks and        
          other financial institutions.                                               

          Petitioner's Books and Records Relating to Expenses                         
               For 1987 and 1988, petitioner’s records generally fail to              
          adequately establish and substantiate the nature and amount of              
          expenses that petitioner incurred.                                          

          Petitioner’s Federal Income Tax Returns                                     
          and Respondent’s Audits                                                     
               On October 13, 1988, and on October 28, 1989, petitioner filed         
          his 1987 and 1988 Federal income tax returns on which petitioner            
          reported, among other things, the following:                                

                                                  1987           1988                 
          Gross Receipts from Law Practice        $232,438       $189,788             
          Business Interest Income                9,254          2,189                
          Less:                                                                       
               Cost of Goods Sold                 17,201         49,596               
               Other Business Expenses            230,767        147,993              
          Net Business Loss                       ($  6,276)     ($  5,612)           
          Other Income                            --             32,326               
          Less Itemized Deductions                --             35,057               
                   Net Tax Loss                  ($  6,276)     ($  8,343)           








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