- 9 - 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...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011