-8-
Respondent’s Determination of Petitioners’ Income
Respondent’s revenue agents determined petitioners’ income.
A different revenue agent was assigned to each petitioner.
Respondent’s revenue agent Ms. Johnson (Revenue Agent Johnson)
was assigned to Mr. Paterson. Revenue Agent Johnson used the
profit factor method to redetermine Mr. Paterson’s income.
Revenue Agent Johnson began by examining the 4 days of betting
sheets seized in the December 1999 search. Revenue Agent Johnson
added 10 percent vigorish, the amount charged on a losing bet, to
the bets listed on the sheet that did not carry vigorish and then
added all bets together to find the gross wagers. Revenue Agent
Johnson then divided the total gross wagers she found, $384,282,
by 4 days of betting to obtain the average daily bet of
$96,070.50.
Revenue Agent Johnson then used the call records for the
cellular phones to determine the number of days people called Mr.
Paterson to place bets. Revenue Agent Johnson multiplied the
$96,070.50 average daily bet by the number of days people placed
bets for each year to arrive at the gross wagers for each year.
Finally, Revenue Agent Johnson multiplied the gross wagers for
each year by 4.54 percent. This percentage represented the
profit a bookmaker would make if his or her books were balanced.
Revenue Agent Johnson determined that Mr. Paterson had gross
income of $357,651.26 in 1997, of which $305,151 Mr. Paterson
failed to report. For 1998, Revenue Agent Johnson determined
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: November 10, 2007