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(5) Expense Checks From LCR; Rebates
Petitioners do not dispute the adjustments on account of
expense reimbursement checks from LCR (Sandra’s employer) and
rebate checks, as shown in tables 7 and 8, supra.
(6) Business Expenditures--Cash
Respondent contends that, to the extent petitioners made
business expenditures in cash that did not go through bank
accounts, petitioners had sources of income in addition to the
amounts they deposited into the bank accounts. Petitioners
contend (a) they had nontaxable sources of cash, chiefly family
gifts (discussed supra) and the cash hoard (discussed infra), and
(b) their business cash expenditures amounted to less than the
amounts for which respondent contends.
(a) 1994.--Respondent contends petitioners made $25,612
business expenditures in cash in 1994. Petitioners contend on
answering brief the correct amount is only $18,308. Both sides
calculate the cash expenditures by starting with “total
expenditures reported” of $64,070. Both sides subtract from this
amount, $4,100 telephone expenses and $624 insurance expenses.
Respondent further subtracts $29,969 (business checks) and $3,765
(credit cards), totaling $33,734. Petitioners contend that
$41,038 business expenditures were made by check and credit
cards. Thus, the difference between the parties on this matter
is accounted for entirely by the differences in their contentions
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