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promotional income and that his gross income was understated by
$53,179. The $69,915 amount is composed of three components.
The first and second components are $5,452 of “8 cent coupon”
income and $523 of postage income. Petitioner reported the
$5,452 of “8 cent coupon” income as a portion of the total
$16,736 of promotional income reported on his 1997 return.
Petitioner conceded that he failed to report $523 in postage
income.
The remaining $63,940 (third component) was derived from the
worksheets provided by petitioner. The rack and promotional
income shown on all four worksheets totaled $63,940. Respondent
points out that petitioner’s promotional contract with R.J.
Reynolds was in effect during 1997, a fact that supports
respondent’s determination. Petitioner argues that the
worksheets are unreliable due to the fact that he was in the
process of learning how to use a computer and made input errors.
In addition, petitioner asserts that the R.J. Reynolds
promotional contract was not in effect during 1997 and that he
did not receive any payments under the contract.
During 1997 petitioner received a check from R.J. Reynolds
for $13,164, the quarterly amount called for in the promotional
contract. Although the record does not reflect the specific
purpose for the payment, it coincides with the amount called for
in the promotional contract. Quarterly payments of $13,164 would
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