Joseph A. and Carol DelVecchio - Page 7




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          Monterey’s bank statements.  At least for 1988, Joseph used an              
          adding machine to prepare adding machine tapes (the adding                  
          machine tapes) totaling various periodic expenses, such as                  
          expenses for repairs and telephone, which were deducted on the              
          Schedule C for 1988.  Entries on the adding machine tapes                   
          correspond to the totals of such expenditures on pages of the peg           
          board.  For example, on the Schedule C for 1988 there is a                  
          deduction for repairs in the amount of $3,991.  There is an                 
          adding machine tape headed “repairs”, with 17 items, totaling               
          $3,991.28.  Column 21 on the check register pages of the peg                
          board is headed “utilities”.  The footed amounts for column 21              
          match, on an item by item basis, all of the items on the adding             
          machine tape.                                                               
          Examination and Investigation                                               
               In January 1990, respondent began an examination of the                
          Forms 1040.  In July 1990, that examination was terminated, so              
          that respondent could commence a criminal investigation of Joseph           
          (the criminal investigation) with respect to his income tax                 
          liability for 1987 and 1988.  The criminal investigation resulted           
          in charges and a trial, at which, on, August 5, 1997, Joseph was            
          acquitted of all charges.                                                   
          Administrative Summons                                                      
               On January 25, 1991, in connection with the criminal                   
          investigation, Special Agent Richard McLaughlin served an                   






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