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petitioner had omitted certain specific items of income. In
particular, it appeared that a deposit of $39,500 received from
McDevitt & Street and deposits totaling $17,287 received from
Floyd & Lloyd Rentals5 had not been included in gross receipts.
In response to Agent Harkins’ findings, petitioner advised that
the amounts were included in rent and other income, categories
reported separately from the gross receipts on petitioner’s 1992
corporate return. Agent Harkins analyzed those specific return
items, compared them to petitioner’s financial records, and found
that the amounts reported in the rent and other income categories
did not include the $39,500 and $17,287 amounts. Agent Harkins
did not check any other of petitioner’s accounts or records to
determine whether the analysis received from petitioner was, in
other respects, correct.
For purposes of trial, petitioner prepared another analysis
of the bank deposits for the 1992 tax year that purported to
contain a reconciliation of the bank deposits and the amounts
reported on the 1992 corporate tax return. That analysis, in an
attempt to account for the $39,500 and $17,287 amounts, contained
numerous unexplained adjustments used to effect the
reconciliation. The analysis presented for purposes of trial did
5 Several exhibits contained in the record refer to this
entity as “Ford and Lloyd”. Petitioner, however, refers to it as
“Floyd and Lloyd”. For consistency, we refer to it as “Floyd and
Lloyd”.
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