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based entirely on their self-serving testimony and are
unconvincing. Moreover, this failure purportedly caused by
miscommunication occurred 2 years in a row. The amounts reported
on petitioners’ returns as Mr. Parsons’ salary or “draw” from
Cedar Hill were $25,000 and $30,000 in 1987 and 1988,
respectively. Petitioners have conceded that the actual amounts
they received from Cedar Hill in those years were $82,106 and
$65,957, respectively. We do not believe that petitioners could
continue to believe that their accountant was successfully
tracking all the cash they were taking from Cedar Hill, via Mrs.
Parsons’ checking account records, which were never furnished to
the accountant, or otherwise, in light of the size of the
discrepancies in the figures reported on the return and the
amounts actually taken in each year. Finally, respondent has
reconstructed personal expenditures in each year (which
petitioners have conceded) that substantially exceed the net
balance plus deposits into Mrs. Parsons’ checking account,
creating the clear inference that significant amounts of cash
taken from Cedar Hill by Mr. Parsons were not deposited into the
account, as petitioners contend, but spent directly on personal
expenditures. Accordingly, even if SMR had been provided with
Mrs. Parsons’ checking account records, it would not have been
able to reconstruct all of Mr. Parsons’ diversions from Cedar
Hill.
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