Manuel and Margaret Karcho - Page 28

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          that petitioners kept two sets of books for the specific purpose            
          of concealing large portions of Banner’s income to avoid paying             
          tax thereon.  One set of records, which was provided to their               
          accountant for purposes of preparing Banner’s tax returns,                  
          purported to demonstrate that Banner’s gross receipts were equal            
          to the amounts deposited into its bank account, which was not the           
          case.  The other set, which recorded substantially higher                   
          receipts for each year in issue, creates a very strong inference            
          that the cash deposited into Banner’s bank account did not                  
          constitute the business’ entire gross receipts.                             
               As for the establishment of an underpayment in each year,              
          petitioners have stipulated that they had substantial amounts of            
          unreported gross receipts from the sale of food items for every             
          year in issue except 1991, conclusively establishing an                     
          underpayment for those years.  With respect to the 1991                     
          underpayment, as well as the remainder of each underpayment in              
          the other years, we believe that the evidence establishes clearly           
          and convincingly that the Meter Readings Sheets accurately                  
          recorded gross receipts from arcade game sales, demonstrating               
          that there was an underpayment arising from the understatement of           
          gross receipts from this source as well.  Petitioners efforts to            
          portray the Meter Readings Sheets as fictitious or erroneous are            
          implausible, inconsistent, and unpersuasive, and they have not              

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