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respondent’s original determination of unreported income of
$380,000 to $120,371, the amount proposed in the notice of
deficiency.
Mr. Ozenne then testified that, in his opinion, the $120,371
was principally due to the double-ups, discussed supra. By
analyzing restaurant records from periods other than the
applicable period (June 1994 through May 31, 1995), he could
prove that the “$120,000” unreported income could be accounted
for by showing that the entries from the bar tapes were
duplicated on the entries from the back end of the restaurant
where the dinner tapes included the entries on the bar tapes.
Mr. Ozenne explained his double-up theory as follows:
Well, what I did, if you take the IRS’s proposed
adjustment of $120,000 and you divide by 365 days,
because they were open every day except Christmas and
Thanksgiving, you get an average of $328. So our
contention is that approximately $328 worth of drinks
every day were added to tape two (2) and to tape one
(1) which are double counted.
What we did initially is we took the day of July
2nd and we added up all the double counts on that one
and it came to $183. Because that was a small group of
tapes, it was probably a weekday that was slow for some
reason. We also took July 14th and came up with $542
as the total for that particular day.
So I felt that between those two, substantiating a
$328 average of the prior year was within reason.
Mr. Chiate continued to lead Mr. Ozenne through their
presentation of petitioner’s theory of the case by asking Mr.
Ozenne if, in his opinion, the dinner checks, and cash register
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