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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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