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explain which jobs or amounts, if any, were erroneously included
in respondent’s determination of HRDC’s 1994 gross income.
Respondent determined that $12,825 was earned by HRDC in
1994 for jobs not listed in HRDC’s records. Petitioners do not
argue that the $12,825 should not be included as income.
Petitioners stipulated that Mr. Payne was due to receive
$45,060.50 in extras in 1994, and that Mr. Payne cashed
$98,258.21 in checks payable to HRDC at the Money Exchange in
1994. With respect to extras that Mr. Payne performed, he
testified that he personally kept all of the money when the
checks were cashed and that no records were kept of the expenses
of materials used for the extras.
The parties also stipulated that in 1994 HRDC deducted
expenses of $20,526.22 that were never paid. As a result, HRDC’s
income was underreported by an additional $20,526.22. Because
petitioners together owned 100 percent of HRDC in 1994, the
incorrect deduction reduced their gross income by $20,526.22 as
well. Petitioners do not argue that their 1994 income was not
underreported by this amount.
Petitioners have not shown that respondent’s reconstruction
of their 1994 income using the sales journal was unreasonable and
that they did not underreport the income they received from HRDC
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