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interest on Mr. Duncan’s outstanding loan balances with peti-
tioner during those respective years.
Respondent also determined in the notice that petitioner
has capital gain income of $108,919 for 1990 as a result of
petitioner’s sale during that year of its business interest to
the Chicago Board of Trade.
Respondent further determined in the notice that petitioner
understated its gross receipts for 1990 and 1991 in amounts
computed as discussed below. Respondent used the bank deposits
method in order to reconstruct petitioner’s gross receipts for
each of the years 1990 and 1991, as follows:
Explanation 1990 1991
Deposits $729,261 $963,097
Nontaxable Receipts from Mr. Duncan (100,900) (58,780)
Amount Received on Sale of (125,000) ---
Business Interest
Repayments to Customers --- (281,614)
Petitioner’s 1991 Check Amount --- 40,000
Gross Receipts $503,361 $662,703[1]
1Due to a mathematical error, the notice determined that
petitioner’s gross receipts for 1991 totaled $662,903. That
mathematical error shall be corrected in the parties’ computa-
tions under Rule 155.
Petitioner’s 1990 return and 1991 return reported gross receipts
of $454,034 and $453,451, respectively. Consequently, respondent
determined in the notice that petitioner had understated its
gross receipts for 1990 and 1991 by $49,327 and $219,452,4
4The $219,452 amount by which respondent determined in the
(continued...)
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