Dak, Inc. - Page 12

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          respondent’s original determination of unreported income of                 
          $380,000 to $120,371, the amount proposed in the notice of                  
               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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