Manuel and Margaret Karcho - Page 4

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               The arcade generated income primarily through the operation            
          of approximately 40 to 45 electronic games maintained for                   
          customers, as well as from the sale of soft drinks, candy, and              
          miscellaneous items.  Customers purchased tokens to operate the             
          games from two token machines on the premises.  The token                   
          machines accepted $5 and $1 bills, as well as quarters, and                 
          dispensed a corresponding number of tokens.  The token machines             
          contained meters designed to record each insertion of a bill or             
          Meter Readings                                                              
               Twice each day, Mr. Karcho recorded the readings from the              
          meters in the token machines on a document labeled "Token                   
          Machines-Meter Readings" (Meter Readings Sheet).  Each Meter                
          Readings Sheet listed the total number of times the meters                  
          recorded the insertion of a $5 bill, $1 bill, or quarter during a           
          day.  The sheet in addition converted these currency totals into            
          a total cash figure.  Some of the Meter Readings Sheets also                
          contained entries at the bottom for individual electronic games             
          and for items identified only with initials.  Dollar figures were           
          recorded for these entries, which were added to the total cash              
          figure recorded for the day.  Mr. Karcho made such recordings on            
          the Meter Readings Sheets generally every day for each of the               
          years at issue.                                                             

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Last modified: May 25, 2011