Manuel and Margaret Karcho - Page 20

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          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                
               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           

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