Jerry L. Crabtree - Page 25

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             principally upon the biased testimony of Mr. Eddie                       
             Crabtree.  We find no credible evidence to support                       
             petitioners’ argument that respondent’s determination is                 
             wrong.  In this regard, we accord no probative weight to                 
             the testimony of petitioners’ witnesses.                                 
                  As to petitioners’ final contention that respondent                 
             failed to give them credit for the cover charges reported                
             on their returns for the years in issue, petitioners are                 
             wrong.  Respondent’s determination of the unreported income              
             of Crabtree Investments gives petitioners full credit for                
             the gross receipts or sales reported on each of the returns              
             in issue.  Thus, any cover charges reported by petitioners               
             have been subtracted from the adjustment computed by                     
             respondent for each of the subject years.  Accordingly,                  
             we find that petitioners have failed to prove that                       
             respondent’s reconstruction of income from cover charges                 
             is incorrect.  See Rule 142(a).                                          

             Income From Food Sales                                                   
                  Petitioners argue that respondent’s estimate of food                
             sales is unreliable and arbitrary.  Petitioners assert that              
             the revenue agent could have reviewed Crabtree Investments’              
             general ledgers to determine the actual amount of food                   
             purchases because food was purchased by check.  Petitioners              

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Last modified: May 25, 2011