Wayne Payne and Dorene J. Payne - Page 16

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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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