- 20 -
this cash-–that he had a cash hoard saved since childhood-–is not
credible.6 Also, petitioners concede on brief that Banner had
unreported income. Finally, the nature of the Meter Readings
Sheets themselves, the figures on which are detailed and
meticulous, not rounded or repetitive, lend support to their
authenticity.
Petitioners’ next argument proceeds on the concession that
Banner had unreported gross receipts from arcade game sales.
Petitioners argue that even if Banner had gross receipts in
excess of the amounts recorded on the Daily Income/Cash Receipts
records and reported on Banner’s returns, the returns nonetheless
accurately reflected taxable income because Banner paid expenses
with unreported cash, such as for part-time workers, food and
miscellaneous supplies, and game parts and repairs. Except in
the case of part-time workers (discussed infra), petitioners’
claim of unreported expenses is supported only by vague
testimony. They provided no basis on which any amount of such
expenses might be estimated,7 let alone an amount equal to the
6 We note in this regard that Mr. Karcho purchased Banner
in 1985 for $25,000 cash and a $25,000 note to the seller. If
Mr. Karcho had a cash hoard predating his acquisition of Banner
of the size that would account for his cash transactions during
the years in issue, we wonder why he found it necessary to
finance one-half of the acquisition price.
7 On brief, petitioners argue that a comparison of the
deductions taken on the last tax return filed by Banner under its
(continued...)
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011