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Income with Respect to Bank Deposits
During 1985 through 1991, in Phoenix, Arizona, petitioner,
either in equal partnership with Michael Talerico (the
partnership) or alone, owned and operated seven movie video
rental stores (hereinafter sometimes referred to as the Store or
the Stores). The partnership and petitioner also sold some of
the Stores. The schedule below indicates for each Store the
owner of the Store, the month or year the Store was purchased or
opened, and the month the Store was sold:
Month/Year
Purchased Month
Name of Store Owner or Opened Sold
Store 1 Petitioner Mid-1980's Mar. 1987
Store 2 Petitioner July 1988 Feb. 1989
Store 3 Partnership Nov. 1988 Feb. 1989
Store 4 Partnership Feb. 1989 --
Store 5 Partnership June 1989 May 1991
Store 6 Petitioner Feb. 1990 --
Store 7 Partnership 1991 --
Petitioner was responsible for finances and managed funds of
the partnership and of the Stores. Payments for rental of the
movie videos (videos) were made by customers with cash, checks,
and credit cards.
Inadequate books and records were maintained with regard to
income and expenses of the partnership and of the Stores. Some
entries were made in what petitioner refers to as general ledgers
reflecting funds received from rental of videos. These so-called
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