Robert K. and Cheryl Hardwick - Page 3

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          $30,000 to $35,000.  Petitioners would travel with $1,000 to                
          $4,000 in cash on each of their gambling trips, which they would            
          spend before they used markers against their lines of credit.               
               When petitioners had spent all of their cash, they would               
          utilize markers, which are self-generated checks from the patron            
          to the casino representing the patron’s draws against a line of             
          credit with the casino.  The marker is paid to the patron in                
          either cash or casino chips.  Petitioners would obtain markers in           
          $2,000 or $2,500 increments.  Approximately 40 to 45 days after             
          obtaining a marker, the dollar amount of the marker would be                
          debited from petitioners’ Equity Line of Credit at Compass Bank             
          of Decatur, Alabama (line of credit).  In 2002, $50,500 in                  
          markers was withdrawn from petitioners’ line of credit.  However,           
          that dollar amount does not include markers that petitioners paid           
          off with gambling winnings or other available cash before they              
          exited a casino.                                                            
               Mr. Hardwick kept a log of petitioners’ gambling winnings              
          and losses during 2002 that consisted of one, lined yellow, piece           
          of notebook paper containing his notations.3  The log also                  

               3The log, which appears to contain some mathematical errors,           
          including the last notation for 2001, which according to the                
          Court’s calculation should have been a $50,530 loss instead of a            
          $50,580 loss, provides the following notations pertinent to 2002            
          (the Court has numbered the log entries by line as follows in the           
          far left hand column for ease of reference):                                

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Last modified: March 27, 2008