Timothy A. Runels and Emma Valdivieso Runels, et al. - Page 12




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          unreported gross receipts of $6,670.  At trial, petitioners                 
          argued that the analysis was faulty because it failed to take               
          into account an insurance settlement of $6,635.90 received in               
          2003.  During her testimony, Mrs. Runels introduced into evidence           
          a document from Interinsurance Exchange of the Automobile Club              
          referencing a February 2, 2003, payment to petitioners of                   
          $6,635.90 for a claim for damage to their dwelling.  Mrs. Runels            
          explained that the payment was for a claim for “our dog flooding            
          our house.”  Petitioners argue that the check “pretty much covers           
          that extra $7,000 they say I made.”  Petitioners are correct; the           
          insurance payment was not included on the “income” side of                  
          respondent’s cash T analysis because they did not inform the TCO            
          about the transaction during the examination.                               
               The Court infers, without evidence to the contrary, that               
          petitioners expended in 2003 the insurance settlement of                    
          $6,635.90 to repair the flood damage to their home.  Since the              
          expenditures for the flood damage repairs were not included on              
          the expense side of the analysis, the exclusion of the insurance            
          settlement payment from the “income” side of the item failed to             
          affect the analysis because it would be balanced by the                     
          additional expenses for repairs.                                            
               Petitioners also argued that they had a $38,000 line of                
          credit available as well as $5,000 in a savings account as of               
          January 2003.  But petitioners offered no evidence during the               







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