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amounts recorded on those records from the sale of food and
miscellaneous items understated income by substantial amounts.
Also, in connection with his guilty plea for attempted income tax
evasion for 1987, Mr. Karcho admitted, in reference to the Daily
Income/Cash Receipts records, that such records were false, and
petitioners have stipulated that similar records were provided to
their accountant for each year in issue for purposes of preparing
Banner’s income tax returns. Finally, petitioners argue on brief
that although the Daily Income/Cash Receipts records did not
record all of Banner’s gross receipts, they are nevertheless
substantially accurate as to Banner’s net income because they
also did not record numerous expenses that were paid with
unrecorded cash. As for the other set of records (the Meter
Readings Sheets and the Reconciliation Sheets that tie in to
them), petitioners attempt to dismiss them as entirely
fictitious. In these circumstances, respondent is entitled to
reconstruct petitioners’ income by any reasonable means. See
Giddio v. Commissioner, supra; Harbin v. Commissioner, supra, and
cases cited therein. On the basis of this record, we believe
respondent’s use of the Meter Readings Sheets to reconstruct
petitioners’ income is reasonable.
Petitioners mount various assaults on respondent’s use of
the Meter Readings Sheets in an attempt to show error in the
income reconstruction. First, as noted, Mr. Karcho testified
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