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OPINION
Deficiency
The record in this case amply demonstrates that petitioners
maintained two sets of books with respect to the operations of
Banner. One set, provided to their accountant each year for
purposes of preparing Banner’s Federal income tax returns,
recorded gross receipts as an amount equal to the deposits made
to Banner’s corporate bank account. These records also purported
to provide a breakdown of the daily bank deposit figure into
categories by source of income (e.g., “Arcade Game Income”, “Food
& Pop Sales”) which, at least in the case of the “Food & Pop
Sales”, petitioners have conceded substantially understated gross
receipts.3 The other set of records, which came to light as a
2(...continued)
game income with respect to those months in 1991. In addition,
there were no records with respect to food sales for Banner’s
1991 taxable year, and as a result respondent did not determine
any unreported income with respect to food sales for that year.
The parties have reached agreement with respect to the
amount of gross receipts, as well as additional costs of goods
sold, attributable to Banner’s food sales in 1987, 1988, 1989,
and 1990. See supra note 1. Accordingly, the unreported income
that remains in dispute concerns arcade game receipts only.
3 The record in this case contains the “Daily Income
Records”, which treat a day’s bank deposit amount as that day’s
gross receipts, covering all of the years in issue except 1991.
The “Cash Receipts” records in evidence, which purport to break
down the bank deposit amount into components such as arcade game
and food sales, cover all years except 1990 and 1991. However,
petitioners have stipulated that they provided similar records to
their accountant for each year at issue for purposes of preparing
(continued...)
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