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dealer. Petitioner recorded most of the gross receipts for FAP
by creating invoices; however, he did not create an invoice for
every sale. Petitioner had no other means to determine the
amount of unrecorded receipts. Petitioner did not deposit all
proceeds from sales into his business or personal bank accounts
and also accumulated cash at his residence. Petitioner reported
income for FAP on Schedule C, Profit or Loss From Business. For
the years 1991, 1992, and 1993 FAP was petitioner’s primary
source of income.
Glenwood
On May 27, 1988, petitioner purchased Glenwood from Glenn
Cantrell for $18,643 and initially operated the business as a
sole proprietorship. An employee managed Glenwood until the
employee’s death that same year. Soon after the employee’s
death, petitioner agreed to form a partnership with Sam
Hammontree (Hammontree), who subsequently became petitioner’s
brother-in-law. Hammontree planned to draw cash from his
retirement fund to pay for a one-half partnership interest in
Glenwood, but he was unable to obtain the funds. Instead,
petitioner and Hammontree orally agreed that Hammontree would
manage and receive a salary from Glenwood and pay petitioner from
Hammontree’s half of the business profits.
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