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accountant of the existence of the cashier’s checks or record the
receipt of the third party checks in the accounting records for
Nick’s Liquors.
During 1997, Nick’s Liquors engaged in “bulk sales”, which
were large, nonitemized orders taken over the phone. The
employee taking a bulk sales order recorded it on paper and made
a copy that was sent to the office of Nick’s Liquors. The
employee personally delivered the order to the customer. Payment
received for the order would either be mailed or delivered to
petitioner in the form of a check. Some of the checks that
petitioner received for bulk sales were used to purchase
cashier’s checks. Respondent determined that petitioner’s gross
receipts were underreported by $25,425 with respect to these
checks. Petitioner did report $6,569 of the bulk sales checks as
income.
During 1997, petitioner used checks received for
reimbursements and refunds from commercial vendors totaling
$3,007 to buy cashier’s checks. Respondent determined that
petitioner’s gross receipts did not include these checks.
Petitioner did not provide adequate records to substantiate that
these payments were properly included in income.
Petitioner also used two payments from insurance companies
to Nick’s Liquors to buy cashier’s checks. One of the checks was
dated December 10, 1996, in the amount of $894. The other check,
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Last modified: May 25, 2011