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Liquors and to Mr. Beck notices of deficiency for the taxable
years 1991, 1992, and 1993.
Using the bank deposits and cash expenditures method,
respondent determined that Beck's Liquors underpaid its tax by
$44,274.16 in 1991, $23,047.49 in 1992, and $37,064.66 in 1993.
Respondent asserts that Beck's Liquors underreported its
income by the following amounts:
1991 1992 1993
Unreported gross receipts 74,453 115,133 84,782
Cost of goods sold 3,014 (39,004) 11,474
Disallowed expenses 46,060 26,476 30,204
Total unreported income 123,527 102,605 126,460
Respondent's adjustments to the gross receipts of Beck's
Liquors were computed as follows:
1991 1992 1993
State Bank deposits 1,574,706 1,475,700 1,554,350
Cash payments 85,164 101,305 75,487
Nonincome items (404,324) (335,616) (391,143)
Total gross receipts 1,255,546 1,241,389 1,238,694
Reported on return 1,181,093 1,126,256 1,153,912
Unreported gross receipts 74,453 115,133 84,782
The cash payments were identified as follows:
Cash payments 1991 1992 1993
Cash expenses--till 138 3,632 1,709
Wage--till 14,118 18,002 2,382
Gambling losses 20,600 15,700 –-
Insurance proceeds 6,535 –- –-
State Bank CD 27,500 –- –-
Norwest Bank 2,273 2,316 4,026
Gate City S&L 9,000 –- –-
Loan payments 5,000 35,000 44,000
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