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Discussion
A. Allowability of cash payments
It’s easy to see why the Commissioner questioned Cox’s claim
that he routinely made cash purchases from Concord. Not only was
the amount involved quite large, but the most common way Cox got
cash was by writing checks to himself or his wife drawn on the
Washington Car Care account. Cox’s general ledger from 2000
lists dozens of such checks recorded as a debit to “Purchases”,
which was Washington Car’s cost-of-goods-sold account. He cashed
many of these checks at local grocery or convenience stores.
This pattern raised the Commissioner’s suspicion that business
accounts were being used for personal expenses.
The Commissioner’s counsel vigorously grilled Cox on these
points at trial, and hammered away especially hard at his failure
to produce business records to support his claims. But Cox's
story held up--with an honest demeanor, no hesitation, and
perfect reasonableness, he explained both the absence of records
and his own check-cashing habits.
He credibly explained that he kept most of his business
receipts and records stuffed in duffel bags, which he stored in a
loft above his repair shop. He also credibly testified that he
was in the habit of employing recently released prisoners,
encouraged in part to do so by his father, a retired sergeant in
the county sheriff's office. Washington Car’s records went
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Last modified: May 25, 2011