James G. LeBloch and Cathy Michelsen LeBloch - Page 24






                                                     -24-                                                       
                   Less reported income:                                                                        
                   Wages                                   56,643      5,290.20       61,933.20                 
                   Interest                                 3,866      1,808.00        5,674.00                 
                   Schedule C gross receipts              501,574        -0-         501,574.00                 
                   Schedule D sales                        86,487        -0-          86,487.00                 
                   Total                                648,570      7,098.20      655,668.20                   
                   Unexplained deposits                    67,484    (70,111.53)                                
             (2,927.53)                                                                                         
                                                     1998                                                       
             Petitioners’                                                                                       
             As       Additional          As                                                                    
             Determined   Adjustments      Adjusted                                                             
                   Total deposits (including interest)     $270,366        -0-        $270,366.00               
                   Less adjustments:                                                                            
                   Interaccount transfers                 129,112     $7,578.00      136,690.00                 
                   Loan repayments                          -0-       15,000.00       15,000.00                 
                   VISA advances                            4,500        -0-           4,500.00                 
                   Gifts                                    5,000        -0-           5,000.00                 
                   Total                                138,612     22,578.00      161,190.00                   
                   Less reported income:                                                                        
                   Wages                                   54,305      8,424.15       62,729.15                 
                   Interest                                 1,004        -0-           1,004.00                 
                   Schedule C gross receipts               36,808        -0-          36,808.00                 
                   Total                                 92,117      8,424.15      100,541.15                   
                   Unexplained deposits                    39,637    (31,002.15)       8,634.85                 
                                                     1999                                                       
             Petitioners’                                                                                       
             As       Additional          As                                                                    
             Determined   Adjustments      Adjusted                                                             
                   Total deposits (including interest)     $191,576        -0-        $191,576.00               
                   Less adjustments:                                                                            
                   Interaccount transfers                  40,702     $4,002.50       44,704.50                 
                   Loan repayments                          -0-       20,000.00       20,000.00                 
                   VISA advances                            3,200         -0-          3,200.00                 
                   Total                                 43,902     24,002.50       67,904.50                   
                   Less reported income:                                                                        
                   Wages                                   79,309      8,576.32       87,885.32                 
                   Interest                                    49        -0-              49.00                 
                   Dividend                                    35        -0-              35.00                 
                   Schedule C gross receipts               37,677        -0-          37,677.00                 
                   Total                                117,070      8,576.32      125,646.32                   
                   Unexplained deposits                    30,604    (32,578.82)                                
             (1,974.82)                                                                                         
             We agree with petitioners to a large extent.  We discuss their                                     

             requested additional adjustments seriatim.                                                         

                   1.  Interaccount Transfers                                                                   

                   Petitioners argue that respondent’s bank deposits analyses                                   

             for the respective years must be adjusted to reflect $15,599.29,                                   

             $7,578, and $4,002.50 of nontaxable transfers of funds between                                     




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