Manuel and Margaret Karcho - Page 5

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          Daily Income and Cash Receipt Records                                       
               For each business day during the years in issue, Mrs. Karcho           
          prepared a document entitled “Daily Income Report” that recorded            
          a dollar figure equal to the amount of cash that Mr. Karcho                 
          deposited into Banner’s bank account for that business day.  A              
          bank receipt for the amount of the deposit for each business day            
          was also retained.  The dollar figure on the “Daily Income                  
          Report”, which was equal to the bank deposit, was substantially             
          less than the total cash figure recorded on the Meter Readings              
          Sheet for the same day.  In addition, Mrs. Karcho prepared daily            
          records labeled “Cash Receipts” which listed the daily figure for           
          the bank deposit (under “Bank Deposit”) and purported to break              
          this figure down into components, based on the source of the                
          income, labeled “Arcade Game Income”, “Food & Pop Sales”, as well           
          as other sales, cash amounts, and receipts.  The daily amounts              
          recorded for “Arcade Game Income” by Mrs. Karcho were                       
          substantially less than the corresponding daily total cash                  
          figures recorded on the Meter Readings Sheets by Mr. Karcho.                
          With respect to the amounts recorded by Mrs. Karcho as “Food &              
          Pop Sales”, petitioners have now conceded that these amounts                
          understated the proceeds from Banner’s sale of food items by                
          $16,428.50 in the 1987 taxable year, $21,230.90 in 1988,                    
          $14,241.27 in 1989, and $9,269.70 in 1990.                                  

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Last modified: May 25, 2011