Dak, Inc. - Page 17

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          bar cash register tapes were duplicated on the dinner cash                  
          register tapes, thus accounting for the “double-ups” theory upon            
          which petitioner relied to invalidate respondent’s determination            
          of $120,371 of unreported income.                                           
               In following Mr. Chiate’s leading questions, Mr. Ozenne                
          testified that by analyzing the restaurant’s 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 there were “double-ups” on the bar            
          and dinner cash register tapes.                                             
               Mr. Ozenne explained the basis for his double-ups theory as            
                    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.                                          
               Having computed the amount of $328 as the base figure needed           
          to arrive at $120,000,3  Mr. Ozenne then incredibly explained how           
          he arrived at a $328 day double-up:                                         
                    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                

          3         To be more accurate, Mr. Ozenne should have divided               
          $120,000 by 363 days because the restaurant was closed on                   
          Christmas and Thanksgiving Day.  He would then have a base figure           
          of $331 to work with, but the Court is confident the discrepancy            
          would not have slowed Mr. Ozenne down.                                      

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