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and axles from one of Regal’s employees, Mr. Gibson would give
cash to the employee and have that employee sign a receipt. Mr.
Gibson provided the Court with 13 receipts dated from July to
December 1993 indicating that he paid Regal $8,041 for wheels and
axles. The additional item of omitted income determined for 1993
as to Mr. Coyle was $2,500 of income from sales of wheels and
axles to Mr. Pearce. Petitioner failed to present any evidence
as to this adjustment.
During the years at issue, Regal employed a bookkeeper to
keep its records. The sales manager or the office manager would
often make notations in Regal’s books and records concerning
sales of mobile homes. In 1992, Regal purchased a computer
system to better maintain its bookkeeping records. Either Mr.
Coyle or the bookkeeper would prepare the bank deposit slips for
deposits made into Regal’s bank accounts. Petitioner, the
bookkeeper, or any one of Regal’s employees made deposits into
Regal’s bank accounts. Regal did not produce copies of its books
and records to respondent or at trial.
Regal’s certified public accountant and tax return preparer,
Steven D. Herman (Mr. Herman), reviewed Regal’s books and records
quarterly because he filed quarterly and annual tax returns for
Regal. He did not audit or analyze Regal’s books and records.
Mr. Herman did not rely on the original underlying documents when
preparing Regal’s returns because they were not available to him.
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