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In June 1992, petitioner and Patricia obtained a $135,000
mortgage loan from the Home Federal Bank (Home Federal), in
Kingsport, Tennessee. The mortgage was secured by their
residence at 1037 Parham Place, Kingsport, Tennessee. Late in
1992 or early in 1993, petitioner and Patricia borrowed
approximately $55,000 from NationsBank.
In December 1992, petitioner purchased the sole ownership
interest in Murphy’s Auto Sales (Murphy’s) for $10,000.
Petitioner and Jack operated Murphy’s throughout 1993, 1994, and
1995 at its location on 330 Lynn Garden, in Kingsport. Murphy’s
was a "buy here, pay here" operation. Its clientele consisted
principally of customers who could not obtain financing for their
automobile purchases elsewhere. Typically, a Murphy’s customer
would sign a sales agreement which indicated the sales price and
any unpaid balance, net of any trade-in and cash deposit. The
sales agreement also indicated an amount which exceeded the
unpaid balance, identified as a "time differential amount which
is amount owing if not paid by cash." This "time differential
amount" represented the total of the unpaid purchase price
balance and the finance charges that would be paid over the
scheduled term of the payments. Each month, Jack recorded the
car sales on manila envelopes. The sales income recorded
included the time differential amount. Once a customer paid off
his account, the records of that account were destroyed.
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Last modified: May 25, 2011