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result of being seized during the execution of a search warrant
covering petitioners’ business premises and residence, recorded
gross receipts as an amount equal to the daily cash totals
compiled by Mr. Karcho based on daily readings of the token
meters as entered on the Meter Readings Sheets. The gross
receipts figures so recorded are substantially greater than those
recorded in the other set of records. Moreover, these records
illustrate that petitioners were tracking the cash that was not
being deposited into Banner’s bank account (or reported to their
accountant); that is, the records list, for each business day, an
amount corresponding to the total cash figure recorded on the
Meter Readings Sheet, the amount deposited into Banner’s bank
account, and the difference between these figures, frequently
denominated as “net”.4
Respondent determined that petitioners had unreported income
from Banner by treating the Meter Readings Sheets as an accurate
measure of Banner’s gross receipts from arcade game sales.
Specifically, respondent determined Banner had unreported income
in each year from arcade game sales equal to the amount by which
3(...continued)
Banner’s income tax returns.
4 Certain monthly totals of this daily “net” figure were
labeled “pocket money” on one of the seized documents.
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