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preparer. Those returns showed losses for Spring Hill restau-
rant. Mr. Slater compared petitioners' returns for 1991, 1992,
and 1993 with Forms 1120S for Paul & Joe, Inc., for those years
and ascertained, inter alia, that petitioners' returns for those
years showed significant interest income. Mr. Slater also
determined from IRS records that a currency transaction report
had been filed with respect to petitioners which showed that on
one day in 1993 they deposited more than $10,000 in cash into
their bank account at Great Western Bank.
Mr. Slater decided to audit the restaurant business of Paul
& Joe, Inc., notified petitioners and their return preparer by
letter of that decision, and requested a meeting. Mr. Slater met
with Mr. Mifsud and petitioners' return preparer. At that
meeting, Mr. Slater asked Mr. Mifsud how he operated the res-
taurant business of Paul & Joe, Inc., inquired about the types of
business records that were kept, and similar matters. Mr. Slater
requested, and received, records relating to corporate bank
accounts and other corporate documents. The only business
records for Paul & Joe, Inc., relating to its gross receipts that
were provided to Mr. Slater during his examination of Paul & Joe,
Inc., and of petitioners were the sales sheets that Mr. Mifsud
completed daily during the years under examination. No other
such records were available because each night throughout those
years Mr. Mifsud discarded the daily cash register tapes and
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