                        T.C. Memo. 2004-28



                      UNITED STATES TAX COURT



                  GEORGE MACIEL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7802-00.            Filed February 4, 2004.



     David M. Kirsch, for petitioner.

     G. Michelle Ferreira and Charlotte A. Mitchell, for

respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:   Respondent determined deficiencies in

petitioner’s Federal income taxes and penalties pursuant to

section 66631 as follows:


     1
      Unless otherwise indicated, all section references are to
                                                   (continued...)
                                     - 2 -

      Year               Deficiency              Penalty Sec. 6663

      19901               $192,954                   $144,715.50
      1991                  71,337                     53,502.75
      1992                  56,075                     42,056.25
      1
        The notice of deficiency for 1990 states the amounts listed above. In
his answer, respondent decreased the deficiency amount and fraud penalty for
1990 to $172,655 and $129,491.25, respectively.

After concessions,2 the issues to be decided for 1990, 1991, and

1992, are as follows:

      (1) Whether, and to what extent, petitioner received and

failed to report income;

      (2) whether petitioner is entitled to various adjustments to

reconstructed income not claimed on his returns;


      1
      (...continued)
the Internal Revenue Code in effect for the years at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
      2
      Respondent concedes that for 1990, petitioner is entitled
to deduct $64,679 in expenses associated with the Tri-City Truck
Parts partnership, and petitioner concedes that his distributive
share of income from Tri-City Truck Parts is $41,105. Respondent
concedes that the sec. 6663 penalty for 1990 does not apply to
the tax attributable to the Tri-City Truck Parts and Equipment
(Tri-City) adjustment of $41,105. Additionally, respondent
concedes petitioner’s entitlement to a partnership loss deduction
for the BAMA Equipment partnership of $26,046 for 1991 and a loss
deduction of $8,777 for 1992. Similarly, petitioner agrees that
he is not entitled to a casualty loss deduction of $25,020 on his
Schedule A, Itemized Deductions, for 1992. Respondent agrees
that the fraud penalty does not apply to tax attributable to this
adjustment.

     At trial, the parties stipulated that petitioner’s share of
the rental income from PSB Trucking with regard to the Boscell
Road property for 1990 is $46,200, rather than the amount
petitioner reported, $50,400. On brief, respondent concedes that
petitioner is entitled to a capital loss of $3,000 for 1992, with
respect to the BAMA Equipment partnership.
                               - 3 -

     (3) whether petitioner intentionally failed to report income

in an effort to fraudulently evade the payment of taxes; and

     (4) whether respondent’s assessment of deficiencies and

penalties is barred by the period of limitations.

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts, supplemental stipulations of facts, and

the attached exhibits are incorporated herein by this reference.

Petitioner resided in Santa Clara, California, at the time he

filed the petition.

A.   General Background

     Petitioner has been involved in the trucking business for

more than 20 years.   During the years at issue, petitioner was

the sole shareholder, president, and chief executive officer of

Alviso Rock, Inc. (Alviso), a corporation organized and existing

under the laws of the State of California.   Alviso was a trucking

and hauling business located in Newark, California.

Additionally, during the aforesaid period, petitioner was the

general manager of George Maciel Trucking, Inc. (GMT), a wholly

owned subsidiary of Alviso.   Alviso and GMT were C corporations

that reported their consolidated income on Forms 1120, U.S.

Corporation Income Tax Return, for the taxable years ending

November 20, 1989, 1990, 1991, 1992, and 1993.
                                - 4 -

     In addition to Alviso and GMT, petitioner engaged in the

following noncorporate business activities.

B.   The BAMA Partnership

     In 1989, petitioner entered into a partnership with Michael

D. Mitchem named BAMA Equipment (BAMA).     BAMA was engaged in the

business of selling new and used trucks.    Petitioner owned a 50-

percent interest in BAMA.

     During the years in issue, BAMA wrote numerous checks to

petitioner and/or his related corporation(s), which he deposited

into noncorporate bank accounts over which he had signatory

authority.    BAMA paid petitioner rent for the use of one of his

real properties, which he deposited into the aforesaid bank

accounts.    BAMA was also a sponsor of petitioner’s racing

business.3

     On his 1991 and 1992 returns, petitioner claimed deductions

for passthrough losses from BAMA of $56,786 and $8,777,

respectively.    For those years, petitioner’s capital accounts in

BAMA were negative $26,046 and $34,823, respectively.    As

previously stated, respondent concedes loss deductionss for 1991

and 1992 of $26,046 and $8,777, respectively.    Additionally,

respondent concedes petitioner’s capital loss deduction of $3,000

for 1992.

     BAMA dissolved in 1992.


     3
      Petitioner’s racing business is discussed in detail below.
                                 - 5 -

C.   Tri-City Truck Parts and Newark Wreckers

     In 1987, petitioner and Peter Viviano (Mr. Viviano) formed

M&V Investments of which each owned a 50-percent interest.4       On

April 14, 1987, M&V Investments purchased a company named Tri-

City Truck Parts and Equipment (Tri-City) for $350,000.     The

seller, Raymound Giarrusso (Mr. Giarrusso), took back a $200,000

note from petitioner and Mr. Viviano with the balance of the

purchase price, $150,000, being paid in cash.    At the same time,

M&V Investments purchased Newark Wreckers, Inc. (Newark

Wreckers), from Mr. Giarrusso for $50,000, for which each partner

paid $25,000.    Accordingly, for the two purchases, each partner

contributed $100,000 and was personally liable under the $200,000

note payable to Mr. Giarrusso.

     For each of the taxable years 1987 through 1990, Newark

Wreckers filed Forms 1120.    Petitioner was a 50-percent

shareholder and president of Newark Wreckers from 1987 through

1989.    Likewise, Tri-City timely filed Forms 1065, U.S.

Partnership Return of Income, for each of the years 1987 through

1990.    Petitioner was a 50-percent income and loss partner of

Tri-City.




     4
      The parties characterize petitioner’s relationship with Mr.
Viviano as a “limited partnership”. However, there is no
indication that the parties entered into a formal limited
partnership or that partnership returns were filed for the years
at issue.
                                 - 6 -

     On April 27, 1990, petitioner sold his 50-percent interest

in M&V Investments (Tri-City and Newark Wreckers) to Mr. Viviano

for $200,000.   The $200,000 purchase price was paid in the form

of three cashier’s checks for $100,000, $75,000,and $25,000,

which were initially made payable to Mr. Viviano but were

subsequently endorsed to petitioner.       Pursuant to the sales

agreement, petitioner relinquished all claims he had in Tri-City

and Newark Wreckers, and he was discharged from his obligation to

pay on the note to Mr. Giarrusso.5       Petitioner did not report

this sale on his 1990 return.6


     5
      The Escrow Statement, Bulk Transfer Escrow Instructions,
and Security Agreement list petitioner’s and Mr. Viviano’s
indebtedness to Mr. Giarrusso as $200,000. The 1990 Schedule L,
Balance Sheet, for Tri-City lists the indebtedness as $202,000.
Respondent describes petitioner’s indebtedness as being $101,000.
We assume respondent used the $101,000 as opposed to the $100,000
on the basis of Tri-City’s 1990 Schedule L. We further assume a
scrivener’s error on the part of Tri-City’s tax return preparer
for 1990 and assign no substantive significance to this
discrepancy.
     6
      Petitioner did, however, attach a statement to his 1990
income tax return which states:

         THE ABOVE NAMED TAXPAYER WAS INVOLVED IN A
         PARTNERSHIP FOR PART OF THE 1990 TAX YEAR. THE
         PARTNERSHIP WAS TRI-CITY TRUCK PARTS. THE
         TAXPAYER DID NOT RECEIVE HIS SCHEDULE K-1 (SHARE
         OF PARTNERSHIP INCOME & DEDUCTIONS) FOR 1990.
         SEVERAL ATTEMPTS WERE MADE TO REACH THE DESIGNATED
         PARTNER OF TRI-CITY TRUCK PARTS (PETER VIVIANO).
         ALL ATTEMPTS WERE UNSECCESSFUL [sic]. AS A RESULT
         THE ABOVE NAMED TAXPAYER WAS UNABLE TO REPORT HIS
         SHARE OF THE PARTNERSHIP’S ACTIVITY FOR THE 1990
         TAX YEAR.

                                                        (continued...)
                               - 7 -

     During 1987 through 1990, Mr. Viviano and petitioner made

several short-term loans/advances to Tri-City and Newark

Wreckers.   There were no formal loan agreements created to

evidence these transactions.   The parties followed the practice

of immediately repaying themselves when the entities were able,

usually within 3 weeks to 3 months.    Petitioner alleges that he

has never been repaid at least $56,450 in loans and advances, and

he now contends that this amount offsets any gain he realized

upon the sale of M&V Investments to Mr. Viviano.

D.   Newark Truck and Body Shop

     With part of the funds secured from Mr. Viviano, in May

1990, petitioner purchased land and a vacant building located at

7373 Wells Avenue, in Newark, California, from Mr. Guarrusso for

$200,000.   Upon receipt of the three cashier’s checks from Mr.

Viviano totaling $200,000, petitioner purchased two cashier’s

checks made payable to himself, one for $175,000 and the other

for $25,000.   On May 16, 1990, petitioner took the $175,000

cashier’s check made payable to himself and purchased two more

cashier’s checks.   One of the cashier’s checks was for



     6
      (...continued)
     The date listed next to petitioner’s signature on his 1990
income tax return is Aug. 14, 1991. The date listed on Tri-
City’s 1990 tax return is Dec. 21, 1991. There is no indication
in the record that petitioner filed an amended return for 1990.
There is no indication that petitioner has ever reported this
sale of his interest. Petitioner testified that he believed that
he had reported the sale.
                               - 8 -

$127,504.82 and made payable to Fidelity National Title,

apparently the escrow agent for the purchase of 7373 Wells

Avenue, and a second cashier’s check was for $47,495.18 and made

payable to petitioner.   On June 11, 1990, petitioner deposited

the second cashier’s check for $47,495.18 and the $25,000

cashier’s check purchased with the funds received from Mr.

Viviano into Bank of Milpitas account No. 512-001-300466.

     During the years at issue, petitioner conducted an

unincorporated business from the 7373 Wells Avenue location named

Newark Truck and Body (Newark T&B).7   Newark T&B was engaged in

the business of truck repair for petitioner’s related businesses

and for unrelated third parties.   Petitioner was the sole owner

of Newark T&B.   Newark T&B had its own invoices and business

cards.   Newark T&B performed truck repairs work for which it

received remuneration.   Petitioner maintained a bank account at

the Bank of Milpitas, account No. 512-001-300466, in the name of

“George A. Maciel c/o Newark Truck & Body”.

     Petitioner garnered significant funds from the Newark T&B

activity.8   Petitioner did not report any of the moneys that

Newark T&B received for repair services on his 1990, 1991, or


     7
      Petitioner initially characterized Newark T&B as an
“activity”. At trial, petitioner admitted this “activity” was a
business.
     8
      On brief, petitioner concedes that total deposits
attributable to Newark T&B for the 3-year period were
$123,953.77.
                                      - 9 -

1992 returns.9       Petitioner’s accountants were not aware of Newark

T&B until after the Internal Revenue Service (IRS) commenced its

audit and investigation.         Alviso/GMT’s bookkeeper was also

unaware of the Newark T&B business operations.

E.   Petitioner’s Racing Business

      During the years at issue, petitioner maintained an

unincorporated automobile racing business under the name “Alviso

Rock/HK Racing”.10       Petitioner was the sole owner of this

business.      During the years at issue, petitioner maintained a

bank account at the Bank of Milpitas, account No. 512-001-102605,

in the name “Alviso Rock/HK Racing”.            During the years indicated,

petitioner received the following amounts of racing income, which

he deposited into the aforementioned bank account:

     Description                   1990              1991           1992

      Deposits                  $16,811.57         $14,397        $31,493.96
      Less: nontaxables1         (4,125.34)         (4,334)       (20,144.00)
      Net racing income          12,686.23          10,063         11,349.96

      1
          The parties stipulated the above nontaxable deposits.

The funds were received from, inter alia, sponsors11 and/or

winnings.


      9
      Petitioner argues that unclaimed expense deductions and
advances/loans substantially offset income that Newark T&B
earned.
      10
      Initially, petitioner characterized this endeavor as an
“operation”, but he admitted at trial that this “operation” was a
business.
      11
      Petitioner’s related businesses, Alviso, GMT, and BAMA,
were among the sponsors.
                              - 10 -

      Petitioner did not report any of the above-listed deposited

funds on his 1990, 1991, or 1992 returns.   Furthermore,

petitioner’s accountants were not aware of this business activity

until after the IRS commenced its audit and investigation.12

F.   Rental Property Income

      During 1990, 1991, and 1992, petitioner owned and held

numerous real properties for investment and lease.   One such

property was located at 41550 Boscell Road, Fremont, California

(the Boscell property).   In 1990, petitioner owned 50 percent of

the Boscell property with Thomas Viviano.   In May 1991, Thomas

Viviano sold his 50-percent interest in the Boscell property to

petitioner.

      During the years at issue, the Boscell property was leased

to two tenants.   One tenant, PSB Trucking, rented space at the

Boscell property for $8,400 per month.   Petitioner reported

rental income attributable to PSB Trucking of $50,400,13 $79,800,

and $100,800 for 1990, 1991, and 1992, respectively.




      12
      Petitioner argues that if unclaimed expense deductions are
considered, his racing business lost money.
      13
      At trial, the parties stipulated that petitioner’s share
of the rental income from PSB Trucking with regard to the Boscell
Road property for 1990 is $46,200, rather than the amount
petitioner reported, $50,400. Respondent concedes that
petitioner reported his proportionate share of the rental income
attributable to PSB Trucking for 1991 and 1992.
                               - 11 -

     A portion of the Boscell property was also rented to P.J.

Vierra & Sons (P.J. Vierra) for $500 per month.    Petitioner did

not report any of the rental income received from P.J. Vierra.14

     In addition to the Boscell property, petitioner held

numerous other real properties for rent.    One such property was

located at 4842 Cabrillo Point, Byron, California.    This property

was leased to Daniel Parquette.    Petitioner received and

deposited rent payments from Daniel Parquette.    Other properties

that petitioner owned included those located at and described as:

1300 State Street, 1573 State Street, 1252 State Street, 1243

State Street, Basset Lot (Santa Clara), 1594 Wabash Street, 1598

Wabash Street, 7373 Wells Avenue, 37243 Filbert Street (Lot), and

Liberty Avenue.    In addition to the Boscell and 4842 Cabrillo

Point properties, during 1990, 1991, and 1992, petitioner

received and deposited into bank accounts over which he had

signatory authority rental income from the following individuals

and/or entities:    Charles and Rose Lamb, Piazza Mobile Sweeping,

BAMA Equipment, Louis and Marion Bewley, James Morrow, Stockton

Semi Trailer, Daniel Parquette, Daniel Estacio, Sines Trucking

Co., Linda Venture, Neil and Betsy Holets, Margaret and Kevin

Deemer, P.J. Vierra & Sons, PSB Trucking, J.S.J. Pipeline, Michel

K. Pipes, Dad’s Enterprises, Linda Venture, Margret or Kevin



     14
      At trial, petitioner could not explain why the rental
income received from P.J. Vierra was not reported.
                              - 12 -

Deemer, and Ricky and Ana Flores.    Petitioner claimed deductions

on his Schedules E, Supplemental Income and Loss, for many of

these real properties.

G.   Petitioner’s Bank Deposits

      During 1990, 1991, and 1992, petitioner deposited

significant sums of money into seven noncorporate bank accounts

over which he had signatory authority.15    The bank accounts were

maintained in the following names:     (1) Bank of Milpitas, account

No. 512-001-200593 “George A. Maciel;” (2) Bank of Milpitas,

account No. 512-001-300466 “George A. Maciel c/o Newark Truck &

Body;” (3) Bank of Milpitas, account No. 512-001-303171 “GM

Investments;” (4) Bank of Milpitas, account No. 512-001-102605

“Alviso Rock/HK Racing;” (5) Wells Fargo Bank, account No. 0108-

363904 “George Maciel” and “Peter Viviano;” (6) Wells Fargo Bank,

account No. 0500-325774 “George A. Maciel;” and (7) Wells Fargo

Bank, account No. 6500-059183 “George Maciel.”    Generally, these

deposits fall into one of four categories.    The first category is

checks made payable to either Alviso or GMT, yet endorsed and

deposited into noncorporate bank accounts over which petitioner

had signatory authority.   An example is check No. 35286, made

payable to Alviso for $7,500, the payor of which is Sutter

Insurance Co. and check No. 426 for $13,000 made payable to GMT,


      15
      The record reflects deposits of more than $1.8 million for
the 3-year period; that is, $715,484.75, $412,514.76, and
$757,186.94, for 1990, 1991, and 1992, respectively.
                               - 13 -

the payor of which is Daniel Hernandez.    Both of these checks are

made payable to Alviso or GMT yet deposited into Bank of Milpitas

account No. 512-001-300466.    The second category represents

workmen’s compensation insurance refund checks made payable to

Alviso or GMT and deposited into noncorporate bank accounts over

which petitioner had signatory authority.    For example, on or

about July 31, 1992, Republic Indemnity Co., refunded Alviso

$57,472, which petitioner deposited into Bank of Milpitas account

No. 512-001-300466.    The third category is payments made to

petitioner from his related entities.    An example of such a

payment is check No. 4153 for $2,476.06 made payable to

petitioner from GMT.    Lastly, there are substantial sums of cash

and their equivalent deposited into noncorporate bank accounts

over which petitioner had signatory authority.    For example, on

June 19, 1990, petitioner deposited $15,000 in traveler’s checks

into Bank of Milpitas account No. 512-001-300466.    Likewise, on

July 18, 24, and 26, 1990, petitioner deposited cash into this

same bank account in the respective amounts of $9,600, $9,700,

and $9,800.

     After depositing some of the aforementioned moneys,

petitioner wrote checks to Alviso or GMT noting on the checks

that these payments were loans.    For example, on or about

November 19, 1990, Transamerica Insurance Group issued a check

payable to Alviso for $67,256.    On December 13, 1990, petitioner
                                - 14 -

deposited this check into Bank of Milpitas, account No. 512-001-

300466.16    On that same day, petitioner wrote a check from this

account to GMT for $50,000 and indicated on the memo line “loan

to GMT”.    The corporation’s bookkeeper made a handwritten

notation, which reads “Art [the accountant]- George put this

money out of pocket - don’t credit as income.    We’re going to pay

our line of credit monthly out of this account, Yvonne” on GMT’s

bank statement for the account into which the $50,000 check was

deposited

     Similarly, on or about June 28, 1991, Republic Indemnity Co.

issued GMT a check for $42,887.    On July 9, 1991, petitioner

deposited this check into Bank of Milpitas, account No. 512-001-

300466.     On that same day, petitioner wrote two checks from this

bank account, one for $30,000 to GMT and one for $10,000 to

Alviso.     Petitioner wrote “loan” on the memo line of both checks.

This same treatment occurred with a $57,472 check to Alviso

received from Republic Indemnity Co.     Petitioner also deposited

this check into Bank of Milpitas account No. 512-001-300466.     On

or about June 4, 1992, petitioner wrote a check to GMT for

$45,000, noting “Loan for Ins.” on the memo line.17


     16
      Petitioner testified that $17,000 of this money was used
to purchase truck parts from a third party, Peterbilt. The truck
parts were purchased in the name of Newark T&B.
     17
      Petitioner testified that he was not sure whether by
depositing the Alviso check he was reimbursing himself for a loan
                                                   (continued...)
                              - 15 -

     After making the above-described deposits, Alviso and GMT

booked some of these “loans” as indebtedness owed to petitioner.

The general ledger for Alviso/GMT for the fiscal year ending

November 1992, shows the note payable balance to petitioner as

$105,000, which consists of three of the four checks petitioner

wrote to the corporations and designated as “loans”.   The

$105,000 note payable balance consists of the following checks

written on Bank of Milpitas, account No. 512-001-300466:

     Date of check        Amount         Payee     Check No.

     12/13/90             $50,000        GMT       Check
     7/9/91                10,000        Alviso    159
     6/4/92                45,000        GMT       195

     Petitioner testified that the designation “loan” for the

$50,000 check was placed on the check to dissuade his sister from

filing a lawsuit against him questioning his ownership rights to

the businesses.   Petitioner testified that he artificially

designated checks as loans to his corporations as a “smoke

screen” to his sister.   At trial, petitioner claimed he did not

intend for many of his checks to be designated as loans for which

he was to be repaid.




     17
      (...continued)
to the corporation for the insurance.
                                - 16 -

H.   Bank Accounts and Reported Income

     During the years at issue, funds were deposited into

noncorporate bank accounts over which petitioner had signatory

authority as follows:18

     1. Bank of Milpitas, account No. 512-001-200593,19 in the

name of “George A. Maciel”:

           Year               Deposits

           1990             $105,340.39
           1991              106,995.75
           1992               94,272.80
     2.   Bank of Milpitas, account No. 512-001-300466,20 in the

name of “George A. Maciel c/o Newark Truck & Body”:

           Year               Deposits

           1990             $516,524.02
           1991              241,243.77
           1992              509,494.83

     3. Bank of Milpitas, account No. 512-001-303171,21 in the

name of “GM Investments”:



     18
      Attached hereto and incorporated herein are appendices A,
B, C, D, and E, which detail the described deposits as agreed by
the parties. Additionally, attached hereto and incorporated
herein as appendix F is a stipulated schedule listing nontaxable
deposit items.
     19
      Appendix A details the deposits made into this bank
account for the years at issue.
     20
      Appendix B details the deposits made into this bank
account for the years at issue.
     21
      Appendix C details the deposits made into this bank
account for the years at issue.
                              - 17 -

           Year             Deposits

           1991            $49,811.07
           1992            121,885.27

     4.   Bank of Milpitas, account No. 512-001-102605,22 in the

name of “Alviso Rock/HK Racing”:

           Year            Deposits

           1990           $16,811.57
           1991            14,397.00
           1992            31,493.96

     5.   Wells Fargo Bank, account No. 0108-363904,23 in the

names of “George Maciel” and “Peter Viviano”:

           Year            Deposits

           1990           $76,463.54

     6.   Wells Fargo Bank, account No. 0500-325774, in the name

of “George A. Maciel”:

           Year            Deposits

           1990               $4.72

     7.   Wells Fargo Bank, account No. 6500-059183, in the name

of “George Maciel”:

           Year           Deposits

           1990           $340.51
           1991             67.17
           1992             40.08



     22
      Appendix D details the deposits made into this bank
account for the years at issue.
     23
      Appendix E details the deposits made into this bank
account for the year at issue.
                                   - 18 -

     The parties stipulated the above sums for the years at

issue.     Additionally, the parties agreed that the above-described

deposits included $328,286.83, $74,180.81, and $407,639.68 of

nontaxable items for 1990, 1991, and 1992, respectively.24             Thus,

the total deposits and agreed nontaxable deposits25 for the years

at issue were:

                           1990               1991              1992

Total deposits      $715,484.75          $412,514.76         $757,186.94
Nontaxable deposits (328,286.83)          (74,180.81)        (407,639.68)
  Net                387,197.92           338,333.95          349,547.26

     The following chart illustrates the total amount and

categories of moneys that petitioner received and reported on his

returns:

                                  1990               1991           1992

Net wages1               $59,642.28            $59,590.17         $54,653.28
Taxable interest          16,872.00             16,131.00           6,595.00
Taxable refunds of state
  and local income taxes   3,985.00               1,499.00             --
Gross rents, royalties,
  etc.                    93,423.00            125,683.00         140,600.00
Other income2              6,000.00                –-                 –-
  Total                  179,922.28            202,903.17         201,848.28
     1
        “Net wages” was calculated by reducing gross wages by Federal income
tax withheld, Social Security tax withheld, and State and local income taxes
withheld.
      2
        This amount was reported in Statement 1 as “Cabrillo Point” on
petitioner’s 1990 return.




     24
          See supra note 18.
     25
      In the stipulation, petitioner reserved the right to
present additional evidence regarding nontaxable items deposited.
                                - 19 -

      Petitioner also wrote checks made payable to “cash” from his

noncorporate bank accounts over which he had signatory authority.

For example, in 1990, petitioner wrote the following checks to

cash from Bank of Milpitas, account No. 512-001-300466:

           Date of Check      Check No.       Amount

              3/20/90            109         $9,645.00
              4/17/90            112          9,741.50
              4/27/90            118          8,697.50
              4/27/90            117          9,750.00
           Total                             37,834.00

At trial, petitioner could not recall the purpose for, or use of,

these funds.26

I.   Petitioner Pled Guilty to Criminal Charges

      On September 23, 1998, petitioner was charged with two

counts of knowingly filing false Federal income tax returns for

1991 and 1992 in violation of 26 U.S.C. sec. 7206(1) (2000).27

On January 13, 1999, petitioner entered a guilty plea to the

aforesaid charges and was sentenced to, inter alia, 36 months of

probation.     In pleading guilty, petitioner admitted that he


      26
      Petitioner included copies of the checks as part of his
exhibits. Since petitioner cannot recall for what these amounts
were expended, he is not now claiming them as adjustments to
reconstructed income.
      27
      In United States of Am. v. George Maciel, case No. 98-
20085-JF, U.S. District Court for the Northern District of
California, petitioner was charged with willfully making a return
he did not believe to be true and accurate; he willfully omitted
the correct amount of income from his return, understating his
income by $78,454 and $75,587 for 1991 and 1992, respectively.
The information alleged he understated his income tax liability
by $19,299 and $10,377 for 1991 and 1992, respectively.
                                - 20 -

“willfully” made and signed his 1991 and 1992 individual tax

returns that he “did not believe” [were] “true and correct” [and]

“willfully omitted true and correct information concerning” [his]

“income, knowing then that” he “had additional reportable income”

of $78,454 and $75,587 for 1991, and 1992, and that there was

additional tax due and owing on this additional income of $19,299

and $10,377 for 1991 and 1992, respectively.

J.   Significant Events in Petitioner’s Life

     Before and during the years at issue, petitioner encountered

a series of stressful events.    These events included the

following:   Two of his friends/employees died; his and his

girlfriend’s child was stillborn; his friend and financial

adviser broke his neck and became a quadriplegic; his former

brother-in-law died in a motorhome fire outside of petitioner’s

office; he was sued in connection with an accident between one of

petitioner’s trucks and a police officer; and his mother was

diagnosed with lung cancer.

                                OPINION

     Respondent determined that during 1990, 1991, and 1992,

petitioner engaged in a scheme to divert income from his business

activities and thereby failed to report substantial earnings on

his income tax returns in order to fraudulently evade the payment

of tax.   Petitioner does not dispute that he underreported

income.   Petitioner’s argument centers on his state of mind and
                                   - 21 -

that “any inaccuracies in his tax returns were caused by

extraordinary stresses and distractions he experienced, not an

intent to evade taxes.”     For the reasons detailed below, we

uphold respondent’s deficiency determinations, with some

modifications, and find that petitioner fraudulently intended to

evade the payment of his tax liabilities for 1990, 1991, and

1992.

     The first question we address is whether there is a

deficiency.     The Commissioner’s determination of tax liability is

presumptively correct, and the taxpayer bears the burden of

showing that the determination is erroneous.28       Zack v.

Commissioner, 692 F.2d 28 (6th Cir. 1982), affg. T.C. Memo. 1981-

700; see DiLeo v. Commissioner, 96 T.C. 858, 871 (1991), affd.

959 F.2d 16 (2d Cir. 1992); Nicholas v. Commissioner, 70 T.C.

1057, 1064 (1978).29

A.      The Amount of the Deficiency

        1.   Unreported Income

        Section 61(a) defines gross income as “all income from

whatever source derived”.        Every person liable for any tax must


        28
      “This presumption of accuracy does not change merely
because the case requires a subsidiary inquiry into the question
of fraud.” Zack v. Commissioner, 692 F.2d 28, 29 (6th Cir.
1982), affg. T.C. Memo. 1981-700.
     29
      Petitioner disputes respondent’s calculations of how much
income he failed to report. He argues also that to the extent he
omitted income, he is entitled to decrease his taxable income by
the amount of unclaimed deductions and adjustments.
                                - 22 -

maintain books and records sufficient to establish the amount of

his gross income.    Sec. 6001; DiLeo v. Commissioner, supra at

867.    The Secretary is authorized to reconstruct income in

accordance with any reasonable method that accurately reflects

actual income.    Secs. 446(b), 6001; Petzoldt v. Commissioner, 92

T.C. 661, 687 (1989); Meneguzzo v. Commissioner, 43 T.C. 824, 831

(1965).    The reconstruction of a taxpayer’s income need only be

reasonable in light of all surrounding facts and circumstances.

Giddio v. Commissioner, 54 T.C. 1530, 1533 (1970); Schroeder v.

Commissioner, 40 T.C. 30, 33 (1963).

       To reconstruct petitioner’s gross income, respondent

utilized both the specific items and bank deposits methods.    The

specific items and bank deposits methods of income reconstruction

have long been sanctioned by the courts.     Clayton v.

Commissioner, 102 T.C. 632, 645 (1994); Estate of Mason v.

Commissioner, 64 T.C. 651, 656 (1975), affd. 566 F.2d 2 (6th Cir.

1977).    “If the taxpayer feels that the Government’s method of

computation is unfair or inaccurate, the burden is on him to show

such unfairness or inaccuracy.”     DiLeo v. Commissioner, supra at

871.

            (a)   Specific Items of Unreported Income From
                  Petitioner’s Sale of Tri-City Truck Parts
                  and Newark Wreckers

       Petitioner held his interests in Tri-City and Newark

Wreckers under the name M&V Investments.    As found above,
                                       - 23 -

petitioner sold his interest in M&V Investments on April 27,

1990.     Respondent calculated petitioner’s income from the sale of

M&V Investments for 1990, using the specific items method of

income reconstruction.         To the extent that petitioner deposited

proceeds from this sale to bank accounts over which he had

signatory authority, those deposits were treated as nontaxable in

respondent’s bank deposits analysis.

     Respondent calculated petitioner’s basis and gain on the

sale of the interest as follows:

     Calculation of Adjusted Basis          Newark Wreckers        Tri-City
           Original cost                       $25,000              $75,000

        Addl. Capital Contributed
        or Withdrawn

             1987                                --                      5,000
             1988                                --                     (5,000)
             1989                                --                    110,231
             1990                                --                     (2,667)

        Petitioner’s Share of Pship. Income/(Loss)

             1987                                --                 (22,603)
             1988                                --                 (78,505)
             1989                                --                (115,377)
             1990                                --                  (5,881)
             1990 (stipulation)1                                     41,105

             Subtotal                           25,000                  1,303
                                                                   2
        Petitioner’s share of pship. debt                           101,000

        Adjusted basis                          25,000                 102,303

        Total combined basis                             127,303

                                                      Calculation of Amount
             Description of Item                        Recognized on Sale

             Cash from Viviano                                $200,000
             Relief from pship. debt                           101,000
             Total amount realized                             301,000
               Less total basis                               (127,303)
                 Amount recognized                             173,697
                                  - 24 -


           1
             On brief, the parties explained that respondent audited and
     initially disallowed all expense deductions for Tri-City’s 1990 taxable
     year. The parties stipulated that petitioner’s income inclusion from
     Tri-City for 1990 was $41,105.
           We agree that this inclusion of income increased petitioner’s
     basis. Subch. K of the Code governs basis in a partnership. Sec. 705
     details how to calculate basis. Specifically, a partner’s basis in his
     partnership interest is increased by, inter alia, the amount of his
     distributive share of taxable income. Sec. 705. Thus, to the extent
     petitioner recognized additional income as a result of the adjustment to
     Tri-City, he is also entitled to an upward adjustment of his basis in
     Tri-City. Respondent’s and petitioner’s calculations correctly
     incorporate the increase in basis due to the additional income
     inclusion.

           2
             See supra note 5. The inclusion of the “extra” $1,000 is
     irrelevant, since it increases the basis and likewise increases the
     amount realized.

     One difference between petitioner’s and respondent’s

calculation of unreported income from this sale is whether the

inclusion of petitioner’s relief from partnership debt under the

sales agreement should be included as part of the sale proceeds.

We believe that respondent, in contrast to petitioner, correctly

includes, as an amount realized, that portion of the liability of

which petitioner is relieved by virtue of the sales agreement.30

“If a partnership interest is sold or exchanged, the reduction in

the transferor partner’s share of partnership liabilities is

treated as an amount realized under section 1001 and the

regulations thereunder.”      Secs. 1.752-1(h), 1.1001-2(a), Income

     30
      Petitioner argues that respondent incorrectly included
petitioner’s relief from indebtedness as an amount realized in
the sale. It is clear that the amount of the indebtedness from
which petitioner is relieved is included as an amount realized in
the sale transaction, and likewise, petitioner’s basis in
partnership is increased by his proportionate share of the
partnership liability. See secs. 705, 722, 752. Thus, the
amount realized is equally offset by the basis increase.
                               - 25 -

Tax Regs. (“the amount realized from a sale or other disposition

of property includes the amount of liabilities from which the

transferor is discharged as a result of the sale or

disposition”).

     Petitioner also alleges that he made $56,450 in

loans/advances to Tri-City and Newark Wreckers for which he was

never reimbursed.   In support thereof, he introduced copies of

checks made payable to the two entities that he alleges were

unpaid “loans”.   Petitioner’s business partner, Thomas Viviano,

testified that each partner would periodically advance/lend funds

to the entities on a short-term basis.     There were no formal loan

agreements made between the businesses and their owners.     Mr.

Viviano testified that it was the practice of the entities to

immediately payback these “loans” as the entities earned income,

usually within a few months.    Petitioner, on the other hand,

testified that at the time he sold his interests to Mr. Viviano,

he was owed $16,200 from Tri-City and $40,250 from Newark

Wreckers.

     We find Mr. Viviano to be credible.    Tri-City’s 1989 Form

1065 shows that advances from partners went from $62,938 at the

beginning of 1989 to $0 at the beginning of 1990.    Thus, we find

petitioner was not owed $16,200 from Tri-City at the time he sold

his interest.    Newark Wreckers is a different story.   The 1989

and 1990 Forms 1120 for Newark Wreckers show a beginning and an
                                   - 26 -

ending balance of advances by shareholders of $24,482 and

$36,741, and $36,741 and $117,604, respectively.         Petitioner

submitted checks showing payments of $40,250 to Newark Wreckers.

Most of these checks were written well before the sale

transaction and according to Mr. Viviano would have been repaid.

Two of the checks, however, were written on February 21 and March

16, 1990, for $2,500 and $5,000, respectively.         Considering Mr.

Viviano’s testimony that the companies repaid shareholder

advances within a few months of borrowing, we find it reasonable

that Newark Wreckers owed petitioner $7,500 at the time of the

sale.     Thus, we find that respondent’s determination of

petitioner’s income from this sale should evidence that in 1990,

petitioner was still owed $7,500 from Newark Wreckers.         However,

we do not, in light of trial testimony, find it reasonable that

Newark Wreckers owed petitioner the balance, $32,750.

             (b). Petitioner’s Income Reconstructed From Bank
                  Deposits

        Bank deposits constitute prima facie evidence of income.

Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).         This method of

determining a taxpayer’s income assumes that all the money

deposited into a taxpayer’s bank accounts during a specific

period constitutes taxable income.          Price v. United States, 335

F.2d 671, 677 (5th Cir. 1964).       Of course, “the Government must

take into account any non-taxable source or deductible expense of

which it has knowledge.”     Id.    Furthermore, “The fact that the
                                    - 27 -

Commissioner was not completely correct does not invalidate the

method employed.”     DiLeo v. Commissioner, 96 T.C. at 868.

     Respondent determined tax deficiencies for 1990, 1991, and

1992 in the respective amounts of $172,655,31 $71,337, and

$56,075.     These deficiency amounts are attributable to

respondent’s reconstruction of petitioner’s income for the years

at issue.     In utilizing the bank deposits method, respondent

calculated petitioner’s unreported income as follows:32

     Bank Acct. Deposits1         1990           1991          1992

     Milpitas acct. 200593     $105,340.39    $106,995.75   $94,272.80
     Milpitas acct. 300466      516,524.02     241,243.77   509,494.83
     Milpitas acct. 102605       16,811.57      14,397.00    31,493.96
     Milpitas acct. 303171              --      49,811.07   121,885.27
     Wells Fargo 363904          76,463.54             --           --
     Wells Fargo 325774               4.72             --           --
     Wells Fargo 059183             340.51          67.17        40.08
       Total deposits           715,484.75     412,514.76   757,186.94

     Add: Funds Not Deposited

     Cash back from deposits
       -acct. 200593             1,571.77            --        500.00
     Cash back from deposits
       -acct. 300466            14,200.00     $2,887.00      6,500.00
     Cash back from deposits
       -acct. 102605                     --          --        160.00
     Boscell rent deposited
       into unknown acct.        62,300.00     61,300.00            --
       Total funds avail.       793,556.52    476,701.76    764,364.94




     31
          See supra page 2.
     32
      On brief, petitioner admits that because of his criminal
conviction he “is estopped to deny that he willfully omitted
$78,454.00 and $75,587.00 of income from his 1991 and 1992
returns, respectively.”
                                     - 28 -
     Less: Nonincome Items Deposited

     Nontaxable deposits2      (328,286.83)   (74,180.81)   (407,639.68)
     Boscell rents
       allocable to
       Viviano                  (49,200.00)   (22,250.00)            --
                               (377,486.83)   (96,430.81)   (407,639.68)

         Taxable deposits                     380,270.95     356,707.26

     Less: Deposits Resulting
     From Reported Income

         Net wages              59,642.28      59,590.17      54,653.28
         Interest income        16,872.00      16,131.00       6,595.00
         State tax refund        3,985.00       1,499.00             --
         Gross rental income    93,423.00     125,683.00     140,600.00
         Other income            6,000.00             –-             --
           Total               179,922.28     202,903.17     201,848.28

     Additional unreported
       income                  236,147.41     177,367.78     154,858.98
     1
         See appendices A, B, C, D, and E.
     2
         See appendix F.

     In arriving at the above stated figures, respondent used

bank records, including deposit slips and checks showing that

these amounts were deposited into petitioner’s bank accounts.

Generally, petitioner does not dispute these deposits, and

respondent has established, by clear and convincing evidence,

that petitioner underreported his income during the taxable years

at issue.      However, petitioner claims that he is entitled to

adjustments in order to determine taxable income.              Petitioner

bears the burden of proof to show any adjustments which would

offset unreported income.         Barragan v. Commissioner, T.C. Memo.

1993-92, affd. without published opinion 69 F.3d 543 (9th Cir.

1995).
                              - 29 -

     2.   Petitioner’s Adjustments to Unreported Income
          Determined by Bank Deposits

     In attacking respondent’s income reconstruction, generally,

petitioner argues that he is entitled to adjustments for

unclaimed deductions of expenses and unreimbursed loans/advances

with respect to his various business activities.33   He contends

that these unclaimed adjustments substantially offset the income

that respondent reconstructed.

          (a) Petitioner’s Alleged Loans/Advances

     Petitioner argues that one of the primary adjustments to the

amount of reconstructed income is unreimbursed loans/advances

that he made to Alviso and GMT.34

     Petitioner alleges that when he deposited insurance refund

checks payable to Alviso and GMT into his personal bank accounts,

he transferred portions of those refunds back to those

corporations.   While this is true, as far as it goes, petitioner


     33
      “[I]t is well settled– ‘that evidence of unexplained
receipts shifts to the taxpayer the burden of coming forward with
evidence as to the amount of offsetting expenses, if any.’”
Franklin v. Commissioner, T.C. Memo. 1993-184 (quoting Siravo v.
United States, 377 F.2d 469, 473 (1st Cir. 1967)).
     34
      However, it appears he was reimbursed for many of these
alleged loans. For example, compare petitioner’s check No. 1086
from Bank of Milpitas, account No. 512-001-200593, dated Dec. 19,
1989, for $999 made payable to “DMV” and GMT’s check No. 3895
dated Dec. 27, 1989, for $1,000 made payable to petitioner which
states on the memo line “Reimburse for DMV fees”. Furthermore,
petitioner’s bookkeeper testified that petitioner’s businesses
customarily repaid such loans. Additionally, petitioner
testified that some of the checks he offered were not loans but
represented his personal expenses.
                               - 30 -

characterized the transfers back as “loans” to his corporations.

Petitioner did not report the receipt of the refunds as income,

and because he characterized the transfer of these amounts to the

corporations as loans, they would not be recorded as corporate

income.   And given that these transfers were characterized as

loans, petitioner would be entitled to receive these amounts back

from the corporations as nontaxable loan repayments.   Under these

circumstances, petitioner is not entitled to reduce his omitted

income by the amounts that he recorded as “loans”.

     Petitioner also alleges that he advanced his personal funds

to purchase parts and equipment for use by Alviso or GMT.35     In

support thereof, petitioner provides the Court with photocopies

of checks made from bank accounts over which he had signatory

authority.36   In all, petitioner alleges that during the 3-year

period, he advanced Alviso and GMT more than $120,000 for which

he was never reimbursed.   However, according to petitioner’s

brief, he is not absolutely sure of the purposes for some of




     35
      For example, petitioner claims that in May 1990, he
purchased a hood for $2,000 using his personal American Express
card to pay for it. For support, petitioner presents only a
photocopy of a check for $4,260 made payable to American Express.
Petitioner admitted at trial that he wrote “Hood ? 2000" on the
memo line of the check after the check had cleared his bank.
     36
      For example, on Aug. 10, 1989, petitioner paid $321 to
“DMV”; on Apr. 8, 1992, he paid $900 to “Rux Onito”; and on Aug.
3, 1992, he paid $1,250 to “Steve Micheles”.
                                - 31 -

these expenditures.37    Additionally, some of the copies of checks

that petitioner provided are made payable to “cash” for

significant sums of money.38

     Petitioner also alleges that he purchased vehicles for the

benefit of Alviso and GMT with his personal funds for which he

was not reimbursed.     However, he fails to provide copies of the

titles or any documentation which would demonstrate in whose

names the alleged vehicles were purchased.

     Petitioner provides no evidence that he advanced/lent

substantial amounts of money to Alviso or GMT except copies of

canceled checks and his trial testimony.39    No payee testified as

to these expenditures.    There is no evidence of a repayment

schedule, maturity date, special rights and duties of the

parties, written memorialization of the debtor-creditor

relationship, etc.    On this record, we find that petitioner


     37
      On brief, petitioner concedes that, to the extent he does
not know the purpose for the expenditure, he is not now arguing
that such expenditure is an adjustment to reconstructed income.
     38
      For example, check No. 109 dated Mar. 20, 1990, for
$9,645; check No. 112 dated Apr. 17, 1990, for $9,741.50; check
No. 119 dated Apr. 30, 1990, for $9,847.00; check No. 118 dated
Apr. 27, 1990, for $8,697.50; and check No. 117 dated Apr. 24,
1990, for $9,750.00. Despite providing the Court with copies of
the aforesaid checks, petitioner is now not claiming these checks
represent either advances or any other deductible business
expense.
     39
       The record indicates that petitioner did not make any such
advances to Alviso or GMT. The balance sheets included with
their 1990, 1991, and 1992 returns list “Loans from Stockholders”
as $0.
                               - 32 -

failed to show that these “advances” constituted expenditures

giving rise to bona fide indebtedness.    But even if such

expenditures were construed as loans to Alviso or GMT, they would

not be deductible by petitioner or offset his income.

          (b) Unclaimed Expenses

     Generally, ordinary and necessary expenses paid or incurred

in the carrying on of a trade or business are deductible by such

individual engaged in the trade or business.      Sec. 162(a); sec.

1.162-1(a), Income Tax Regs.    The expenditure must be “directly

connected with or pertaining to the taxpayer’s trade or

business”.    Sec. 1.162-1(a), Income Tax Regs.   “The determination

of whether an expenditure satisfies the requirements of section

162 is a question of fact.”    Shea v. Commissioner, 112 T.C. 183,

186 (1999).    The taxpayer has the burden of proving that he is

entitled to deductions.    INDOPCO, Inc. v. Commissioner, 503 U.S.

79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435

(1934).

     All deductible expenses are subject to substantiation.

Secs. 274(d), 6001.    The general substantiation requirement is

set forth in section 6001 and provides in pertinent part:     “Every

person liable for any tax imposed by this title, or for the

collection thereof, shall keep such records * * * and comply with

such rules and regulations as the Secretary may from time to time
                                  - 33 -

prescribe.”40   The regulations provide that “any person subject

to tax * * * shall keep such permanent books of account or

records, * * * as are sufficient to establish the amount of * * *

deductions”.    Sec. 1.6001-1(a), Income Tax Regs.

     In the event that a taxpayer establishes that a deductible

expense has been paid, but he is unable to substantiate the

precise amount, the Court may estimate the amount of such

deduction bearing heavily against the taxpayer.41      Cohan v.

Commissioner, 39 F.2d 540, 543-44 (2d Cir. 1930).      However, the

Court cannot make such an estimate unless the taxpayer presents

sufficient evidence to provide a reasonable basis upon which the

estimate is made.       Vanicek v. Commissioner, 85 T.C. 731, 743

(1985).

                 (i).    Deductibility of Petitioner’s Alleged
                         Expenses

                        (A).   Newark T&B Expenses

     Petitioner claims that no expenses relating to Newark T&B

were claimed as deductions.      Petitioner’s argument centers on the

real property he bought to conduct Newark T&B’s business


     40
      Strict substantiation is required for specific classes of
expenses, including “listed property” described in sec.
280F(d)(4). See sec. 274(d).
     41
      The Court’s ability to reasonably estimate the amount of a
deduction is curtailed in the case of certain classes of
expenses. Sec. 274(d) limits the Court’s estimating ability.
Sanford v. Commissioner, 50 T.C. 823, 827 (1968), affd. per
curiam 412 F.2d 201 (2d Cir. 1969); see Golden v. Commissioner,
T.C. Memo. 1993-602.
                                 - 34 -

operations and the expenses that he alleges are associated with

this activity.42   These expenses include, inter alia, telephone

and utility bills.    The record shows that petitioner, in

contradiction to his argument, did deduct expenses associated

with this property.    For example, petitioner deducted $6,639,

$11,699, and $11,392 in connection with the real property as

listed on Schedule E for his 1990, 1991, and 1992 returns,

respectively.   Indeed, petitioner provided no invoices to

substantiate any of the expenses he alleges that he paid on

Newark T&B’s behalf.    Furthermore, petitioner failed to offer

evidence that these expenses were paid by Newark T&B and not by

Alviso or GMT.43

                       (B)   Petitioner’s Racing Business

     Petitioner also argues that he did not claim as deductions

any expenses associated with his racing business.     He alleges

that he incurred expenses of $17,847.23, $15,065.23, and



     42
      On brief, petitioner claims he is entitled to unspecified
amounts of deductions for depreciation. However, there is
insufficient evidence in the record with which we can calculate
any depreciation to which petitioner might be entitled.
     43
      “The rule is well established that the failure of a party
to introduce evidence within his possession and which, if true,
would be favorable to him, gives rise to the presumption that if
produced it would be unfavorable.” Wichita Terminal Elevator Co.
v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513
(10th Cir. 1947). “This is especially true where, as here, the
party failing to produce the evidence has the burden of proof or
the other party to the proceeding has established a prima facie
case.” Id.
                                - 35 -

$30,283.07 for 1990, 1991, and 1992, respectively.      In support

thereof, petitioner proffers copies of checks from the “Alviso

Rock/HK Racing” bank account, copies of bank account statements,

and invoices.   No one other than petitioner testified about this

endeavor or the purported expenses.      From the evidence provided,

we are unable to determine whether the expenses detailed in the

invoices were for the benefit of petitioner’s racing business or

for one of his related businesses.       Nearly all the invoices are

made to “Alviso Rock”.

                (ii).    Petitioner Does Not Sustain His Adjustments
                         to Reconstructed Income

     We are unable to sustain petitioner’s alleged unclaimed

expense deductions to the income that respondent reconstructed.

Petitioner fails to provide sufficient evidence to support the

expense deductions he claims for the years at issue.      Petitioner

failed to offer the testimony of any of the payees of his checks

to support his allegations.    The only evidence he has provided

are photocopies of checks, some invoices, and his trial

testimony.   We find petitioner’s testimony self-serving, vague,

and not persuasive.     “It is well settled that we are not required

to accept petitioner’s self-serving testimony in the absence of

corroborating evidence.”     Jacoby v. Commissioner, T.C. Memo.

1994-612 (citing Lerch v. Commissioner, 877 F.2d 624, 631-632

(7th Cir. 1989), affg. T.C. Memo. 1987-295); see Geiger v.

Commissioner, 440 F.2d 688, 689 (9th Cir. 1971), affg. per curiam
                                 - 36 -

T.C. Memo. 1969-159; Niedringhaus v. Commissioner, 99 T.C. 202,

212 (1992); Tokarski v. Commissioner, 87 T.C. at 77 (“Under all

the circumstances, we are not required to accept the self-serving

testimony of petitioner”).

     Furthermore, we are unable, given the record before us, to

determine which expenses are associated with which business

activity, be it petitioner’s corporations or his unincorporated

businesses.     The record unequivocally demonstrates that

petitioner failed to follow and respect business formalities.

Instead, the record evidences the inflows and outflows of

substantial sums of money by and between petitioner and his

related businesses.     The books and records of petitioner’s

affiliated corporations and businesses were not offered as

evidence.44

     3.      Taxable Income and Earnings and Profits

     Petitioner argues, for the first time on brief, that

respondent failed to demonstrate that there were sufficient

earnings and profits (E&P) to deem funds that petitioner received

from GMT and Alviso as taxable dividends.45     Additionally,


     44
      For example, the invoices that petitioner submitted in
support of his entitlement to deductions for expenses associated
with his racing business are made to “Alviso”. Without the books
and records of Alviso, it is impossible to determine if these
invoices represent expenses of Alviso, for which deductions have
already been taken.
     45
          “This Court generally will not consider issues that are
                                                       (continued...)
                                - 37 -

petitioner alleges that respondent failed to demonstrate that any

amounts received from Alviso and GMT exceeded his basis therein.

     Generally, gross income includes net accessions to wealth

from whatever source derived.     Sec. 61; Han v. Commissioner, T.C.

Memo. 2002-148 (citing Commissioner v. Glenshaw Glass Co., 348

U.S. 426, 431 (1955)).     Section 301, however, places a

restriction on the definition of gross income.       Barnard v.

Commissioner, T.C. Memo. 2001-242.       Generally, that section

provides that funds distributed by a corporation over which the

shareholder has dominion and control are taxed under the auspices

of section 301(c).   Id.    Pursuant to section 301(c), a

constructive dividend46 is taxed as ordinary income only to the




     45
      (...continued)
raised for the first time on brief, particularly where the
belated claim would prejudice a party.” Han v. Commissioner,
T.C. Memo. 2002-148; Rules 34(b)(4), 41(a) and (b); Foil v.
Commissioner, 92 T.C. 376, 418 (1989), affd. 920 F.2d 1196 (5th
Cir. 1990); Markwardt v. Commissioner, 64 T.C. 989, 997 (1975);
see also Bob Wondries Motors, Inc. v. Commissioner, 268 F.3d 1156
(9th Cir. 2001), affg. Toyota Town, Inc. v. Commissioner, T.C.
Memo. 2000-40. This Court has held on numerous occasions that it
will not consider issues not pleaded. See, e.g., Estate of
Mandels v. Commissioner, 64 T.C. 61 (1975); Estate of Horvath v.
Commissioner, 59 T.C. 551, 556 (1973); Frentz v. Commissioner, 44
T.C. 485, 491 (1965), affd. 375 F.2d 662 (6th Cir. 1967).
     46
      “The crucial concept in a finding that there is a
constructive dividend is that the corporation has conferred a
benefit on the shareholder in order to distribute available
earnings and profits without expectation of repayment.”
Truesdell v. Commissioner, 89 T.C. 1280, 1295 (1987) (citing
Noble v. Commissioner, 368 F.2d 439, 443 (9th Cir. 1966), affg.
T.C. Memo. 1965-84).
                               - 38 -

extent of the distributing corporation’s E&P;47 any excess is

nontaxable return of capital to the extent of the taxpayer’s

basis; and any remaining amount received is taxable as capital

gain from the sale or exchange of a capital asset.    Sec.

301(c)(1),(2), and (3); Truesdell v. Commissioner, 89 T.C. 1280,

1295-1298 (1987); Barnard v. Commissioner, supra.

       “It is well established that when controlling shareholders

divert corporate income to themselves, it is proper to treat such

diverted funds as constructive dividends for tax purposes.”

DiLeo v. Commissioner, 96 T.C. at 883.     As stated more fully

above, the Commissioner’s deficiency determination is

presumptively correct, and the taxpayer bears the burden of

showing that determination is erroneous.    See Rule 142(a); Zack

v. Commissioner, 692 F.2d 28 (6th Cir. 1982); DiLeo v.

Commissioner, supra at 871.    Respondent’s deficiency

determination included those amounts diverted from Alviso and

GMT.    Under these circumstances, petitioner bears the burden of

showing that Alviso and GMT did not have sufficient E&P to deem

the subject “distributions” to be constructive dividends.

DiZenzo v. Commissioner, 348 F.2d 122, 125-127 (2d Cir. 1965)

(burden is on taxpayers to establish corporation did not have

sufficient E&P), revg. T.C. Memo. 1964-121; Truesdell v.



       47
      The determination of earnings and profits is governed by
sec. 316 and the regulations promulgated thereunder.
                                - 39 -

Commissioner, supra; Zalewski v. Commissioner, T.C. Memo. 1988-

340; Delgado v. Commissioner, T.C. Memo. 1988-66; see Price v.

United States, 335 F.2d at 677 (“It is the burden of the taxpayer

to demonstrate a non-taxable source for this cash.”).    Here,

petitioner failed to provide any proof that Alviso and GMT did

not have sufficient E&P to determine the distributions as

taxable, constructive dividends.    Likewise, petitioner offered no

evidence of his adjusted bases.48

     Accordingly, we find that petitioner has untimely raised the

E&P and basis issues and, otherwise, has failed to meet his

burden.49

     4.     Respondent’s Deficiency Determinations Are Not Erroneous


     48
      In United States v. Miller, 545 F.2d 1204, 1215 (9th Cir.
1976), the court explained:

          In holding that the constructive distribution
          should not automatically be applied, it is not
          herein asserted that diverted funds could never be
          a return of capital. However, to constitute the
          latter, there must be some demonstration on the
          part of the taxpayer and/or the corporation that
          such distributions were intended to be such a
          return. To hold otherwise would be to permit the
          taxpayer to divert such funds and if not caught,
          to later pay out another return of capital; or if
          caught, to avoid the conviction by raising the
          defense that the sums were a return of capital and
          hence non-taxable.
     49
      Additionally, petitioner failed to demonstrate that the
distributions from his wholly owned corporations and employers
were not additional remuneration for the management services he
provided. The record reflects that Alviso and GMT each paid
petitioner a salary during the years at issue.
                              - 40 -

     We find that respondent has produced substantial evidence

demonstrating that petitioner received unreported income.

Delaney v. Commissioner, 743 F.2d 670, 671 (9th Cir. 1984), affg.

T.C. Memo. 1982-666; see Bradford v. Commissioner, 796 F.2d 303,

305 (9th Cir. 1986), affg. T.C. Memo. 1984-601.   Furthermore, we

find that petitioner has failed to establish by a preponderance

of the evidence that respondent’s determinations were arbitrary

or erroneous.   Rapp v. Commissioner, 774 F.2d 932, 935 (9th Cir.

1985), Larsen v. Commissioner, 765 F.2d 939, 941 (9th Cir. 1985);

Delaney v. Commissioner, supra at 671.   Accordingly, we sustain,

subject to the aforesaid50 and the concessions of the parties,

respondent’s deficiency determinations for the years herein at

issue.

B.   Fraud Penalties

     The Commissioner bears the burden of proving by clear and

convincing evidence that an “underpayment exists for the years in

issue and that some portion of the underpayment is due to fraud.”

Temple v. Commissioner, T.C. Memo. 2000-337 (citing sec. 7454(a),

Rule 142(b); Niedringhaus v. Commissioner, 99 T.C. at 210), affd.

62 Fed. Appx. 605 (6th Cir. 2003); see Baumgardner v.

Commissioner, 251 F.2d 311 (9th Cir. 1957), affg. T.C. Memo.



     50
      As previously stated, the computation under Rule 155 shall
evidence that petitioner was owed $7,500 from Newark Wreckers.
See supra page 26.
                                - 41 -

1956-112; Hebrank v. Commissioner, 81 T.C. 640, 642 (1983).

Thus, respondent must establish that petitioner underpaid his

taxes for each year in issue and that some part of the

underpayment for each year is due to fraud.     DiLeo v.

Commissioner, supra at 873.

     1.     Clear and Convincing Evidence of Underpayment

     “To prove an underpayment, the Commissioner is not required

to establish the precise amount of the deficiency determined by

him.”     Id.; see Otsuki v. Commissioner, 53 T.C. 96, 105 (1969).

“However, he cannot discharge his burden by simply relying on the

taxpayer’s failure to prove error in his determination of the

deficiency.”     DiLeo v. Commissioner, supra at 873.   The

Commissioner need only establish that the taxpayer received

unreported income and that the nondisclosure resulted in a tax

deficiency.     United States v. Campbell, 351 F.2d 336, 338 (2d

Cir. 1965); Elwert v. United States, 231 F.2d 928, 931 (9th Cir.

1956); United States v. Bender, 218 F.2d 869, 871-72 (7th Cir.

1955); Langworthy v. Commissioner, T.C. Memo. 1998-218.

        When the allegations of fraud are intertwined with

unreported and indirectly reconstructed income, the Commissioner

can satisfy his burden of proving the underpayment in one of two

ways:     (1) By proving a likely source of the unreported income;

or (2) where the taxpayer alleges a nontaxable source, the

Commissioner may meet his burden by disproving the taxpayer’s
                                - 42 -

alleged nontaxable source.    DiLeo v. Commissioner, supra at 873-

874.    In this case, there is no question of the origin of the

unreported income.    The parties have also agreed that some

deposits were from nontaxable sources.    Petitioner admits on

brief that he willfully omitted $78,454 and $75,587 of income

from his 1991 and 1992 returns.    In his written guilty plea in

his criminal case, petitioner admitted that he willfully omitted

reportable income of $78,454 and $75,587 and that there was

additional tax due on this omitted income of $19,299 and $10,377

for 1991 and 1992, respectively.    And, as previously explained,

there is clear and convincing evidence that he failed to report

additional amounts of income for each of the years at issue.

       During the 3-year period at issue, more than $1.8 million

flowed through his bank accounts.    Petitioner does not dispute

this, but instead argues that much of this money is nontaxable

reimbursements for moneys advanced to and/or expenses incurred

for the benefit of his various business activities.    When bank

deposits make out a prima facie case of underreported income, the

taxpayer has the burden of proving additional expenses that he

did not claim on his returns.     Morse v. Commissioner, T.C. Memo.

2003-332 (citing Siravo v. United States, 377 F.2d 469, 473-474

(1st Cir. 1967); Elwert v. United States, supra at 933).       As

previously explained, petitioner has failed to do so.
                              - 43 -

     There is also clear and convincing evidence that petitioner

failed to report substantial income from the sale of his interest

in Tri-City and Newark Wreckers in 1990.

     Accordingly, we are convinced that respondent has proven by

clear and convincing evidence that petitioner underpaid his

income taxes due and owing for the years at issue.

     2.   Intent To Defraud

     As previously explained, the Commissioner bears the burden

of proving fraud by clear and convincing evidence.   Sadler v.

Commissioner, 113 T.C. 99, 102 (1999); Posnanski v. Commissioner,

T.C. Memo. 2001-26; see Henson v. Commissioner, 887 F.2d 1520

(11th Cir. 1989), affg. in part and revg. in part on another

ground T.C. Memo. 1986-303; Temple v. Commissioner, supra.

“Where fraud is determined for each of several years,

respondent’s burden applies separately for each of the years.”

Temple v. Commissioner, supra; see Cefalu v. Commissioner, 276

F.2d 122 (5th Cir. 1960), affg. T.C. Memo. 1958-37; Baumgardner

v. Commissioner, supra.

     “Fraud is the intentional wrongdoing on the part of a

taxpayer to evade a tax believed to be owing.”   Temple v.

Commissioner, supra; see DiLeo v. Commissioner, 96 T.C. at 874;

Prof. Serv. v. Commissioner, 79 T.C. 888, 930 (1982).   “The

required state of mind is one which, ‘if translated into action,

is well calculated to cheat or deceive the government.’” Zell v.
                              - 44 -

Commissioner, 763 F.2d 1139, 1143 (10th Cir. 1985), affg. T.C.

Memo. 1984-152 (quoting 10 Mertens, Law of Federal Income

Taxation, sec. 55.10, at 46 (1984)).   A taxpayer’s background and

the context of the events in question may be considered in

determining fraudulent intent.   Plunkett v. Commissioner, 465

F.2d 299 (7th Cir. 1972), affg. T.C. Memo. 1970-274; see Temple

v. Commissioner, supra (a taxpayer’s level of education and his

prior history of filing income tax returns are relevant to the

inquiry).

     Because it is difficult to prove fraudulent intent by direct

evidence, fraud can be inferred from various kinds of

circumstantial evidence.   Courts describe these “badges of fraud”

as including the following:   (1) Understatement of income;51 (2)

failing to maintain adequate records; (3) failure to file tax

returns; (4) implausible or inconsistent explanations; (5)

concealment of assets; (6) failure to cooperate with tax

authorities; (7) the filing of false documents; (8) making of

false and inconsistent statements to revenue agents; (9)

concealing income from a taxpayer’s tax preparer; and (10)



     51
      “The consistent understatement of large amounts of income
for a number of years is evidence of willful intent to evade.”
Otsuki v. Commissioner, 53 T.C. 96, 108 (1969). In Holland v.
United States, 348 U.S. 121, 139 (1954), “the Supreme Court
declared that ‘evidence of a consistent pattern of underreporting
large amounts of income’ will support ‘an inference of
willfulness’”. Otsuki v. Commissioner, supra at 108.
                                - 45 -

extensive dealings in cash.     Bradford v. Commissioner, 796 F.2d

at 307; Parks v. Commissioner, 94 T.C. 654, 664 (1990); Temple v.

Commissioner, T.C. Memo. 2000-337.       No single factor is

necessarily dispositive, but a combination of several factors is

persuasive circumstantial evidence of fraud.       Petzoldt v.

Commissioner, 92 T.C. at 699.    “A pattern of consistent

underreporting of income, particularly when accompanied by other

circumstances exhibiting an intent to conceal, justifies the

inference of fraud.”     Posnanski v. Commissioner, supra; see

Holland v. Commissioner, 348 U.S. 121, 137 (1954).

     Petitioner consistently underreported large sums of money.

See Marcus v. Commissioner, 70 T.C. 562, 577 (1978), affd.

without published opinion 621 F.2d 439 (5th Cir. 1980).

Petitioner’s failure to substantiate adequately his alleged

advances and expenses makes it impossible to verify his

allegations.   This Court has found in a similar case that the

“inadequacy of petitioners’ records, under the circumstances,

constitutes a significant indicia of fraud.”       Otsuki v.

Commissioner, 53 T.C. at 110 (citing Galant v. Commissioner, 26

T.C. 354, 365 (1956)).

     Petitioner cannot rely upon events that occurred in his life

before, during, and after the relevant periods in issue.         While

we are sympathetic with petitioner’s personal problems, we cannot

condone his failure to report significant sums of income over a
                               - 46 -

3-year period merely because his mind was not on business.52    We

find petitioner’s defense of personal tragedy misplaced.

Petitioner was sufficiently focused and cognizant to, inter alia,

open and operate numerous businesses during the relevant period,

engage in significant investment activities, engage the

assistance of trained accounting professionals, and earn and

deposit significant sums of money into his numerous bank

accounts.

     In support of our finding of fraud, we outline pertinent

portions of the record:

     (1) Petitioner sold his interest in Tri-City and Newark

Wreckers for which he received $200,000 and was relieved of

substantial indebtedness.    To this day, petitioner has failed to

report this transaction.53


     52
      In Otsuki v. Commissioner, supra at 110, the taxpayer
advanced, and we rejected a similar argument. The taxpayer was
too busy and too tired to maintain adequate business records.
     53
      Petitioner admits on brief, that he failed to report a net
gain from the sale of between $17,247 and $118,247. This, of
course, is after inclusion of $41,105 in additional income for
1990, which accordingly, increased his basis in the Tri-City
partnership. Thus, before respondent’s examination and
redetermination of Tri-City’s 1990 income, it was reasonable for
petitioner to assume that he had substantially more net gain (at
least $41,105 more) from the sale of Tri-City, which he never
reported.

     Petitioner seeks solace in a statement that his accountant
prepared, which he attached to his 1990 return. We find this
statement, given the specific circumstances of this case, at the
                                                   (continued...)
                              - 47 -

     (2) Petitioner diverted substantial amounts of money from

his related corporations, Alviso and GMT.   To hide the character

of these funds petitioner gave a portion of these diverted funds

back to his corporations, labeling those funds as loans.      To that

end, petitioner purposely misled his accountants as to the true

nature of these funds.   For example, on one of GMT’s bank

statements for the account into which a $50,000 check was

deposited, there is a handwritten notation that the corporation’s

bookkeeper made which reads “Art [the accountant]- George put

this money out of pocket - don’t credit as income.    We’re going

to pay our line of credit monthly out of this account, Yvonne.”

     (3) Petitioner garnered significant funds over a 3-year

period from his solely owned, unincorporated business Newark T&B,

and he failed to report any income earned therefrom.    Petitioner

characterized this endeavor on his income tax returns Schedules E

as a “lot”.   Furthermore, petitioner failed to maintain proper

books and records for this business.

     (4) Petitioner maintained an automobile racing business,

which also earned him substantial sums of income.    Again,


     53
      (...continued)
very least vague and ill-informing. This statement speaks only
to petitioner’s inability “TO REPORT HIS SHARE OF THE
PARTNERSHIP’S ACTIVITY FOR THE 1990 TAX YEAR.” The statement
does not communicate that in 1990 petitioner received at least
$300,000 of value in exchange for his interest, a transaction
which is clearly not a “partnership activity”. Furthermore, the
statement refers only to Tri-City and not to Newark Wreckers.
                               - 48 -

petitioner failed to report any of these earnings or maintain

adequate books and records for this business.

     (5) Petitioner owned and operated for income and investment

at least 12 parcels of real property.    Although petitioner

apparently did report much of the income he received from these

properties, he failed to report all the income.    When questioned

about this failure, petitioner explained:    “I just don’t really

have an explanation.”    However, petitioner did claim expense

deductions for these properties.    Again, petitioner failed to

maintain adequate books and records for this significant business

endeavor.

     (6) During the relevant period, petitioner dealt in

significant sums of cash or its equivalent for which he has no

explanation.    For example, during 1990, petitioner wrote four

checks made payable to cash for the total sum of $37,834.      At

trial, petitioner could not recall the purpose for, or use of,

these funds.    Likewise, petitioner deposited large sums of cash

and its equivalent into his bank accounts.    We infer significant

dealings in cash without a definite explanation as an indicia of

fraud.   See Parks v. Commissioner, 94 T.C. 654 (1990).

     (7) Petitioner failed to inform his accountants (and his

bookkeeper) of Newark T&B and his racing business.    Both of these

businesses earned income for the years at issue, none of which

was reported.
                                - 49 -

     (8) Petitioner’s admission that he purposely mislabeled

checks to his corporation as loans is also evidence of his

willingness to defraud.   See Solomon v. Commissioner, 732 F.2d

1459 (6th Cir. 1984), affg. T.C. Memo. 1982-603; Afshar v.

Commissioner, 692 F.2d 751 (4th Cir. 1982), affg. without

published opinion T.C. Memo. 1981-241.

     The record before the Court clearly and convincingly

demonstrates a pattern of consistent underreporting of income.

The record clearly and convincingly shows that petitioner

intentionally concealed significant business operations from his

accountants and bookkeeper.   Petitioner’s vague testimony

buttresses our finding.   There can be little doubt that

petitioner’s failure to keep adequate records of all earnings and

expenses is material evidence of fraud.   See Otsuki v.

Commissioner, 53 T.C. at 109.    “To hold otherwise would, as the

Supreme Court stated in United States v. Johnson, 319 U.S. 503,

518 (1943) ‘be tantamount to holding that skillful concealment is

an invincible barrier to proof.’”    Id. at 109.   The insufficiency

of petitioner’s records, under these circumstances, constitutes a

significant indicia of fraud.    Id. at 110.

     3.   Petitioner’s Conviction and Collateral Estoppel

     We find petitioner’s guilty plea of knowingly filing false

returns for 1991 and 1992 is additional evidence, which ensures

us that the imposition of the fraud penalty in this case is
                               - 50 -

justified.54   In his written guilty plea, petitioner admitted

that he “willfully” made and signed his 1991 and 1992 individual

tax returns that he “did not believe” [were] “true and correct”

[and] “willfully omitted true and correct information concerning”

[his] “income, knowing then that” he “had additional reportable

income” of $78,454 and $75,587 for 1991, and 1992, and that there

was additional tax due and owing on this additional income of

$19,299 and $10,377 for 1991 and 1992, respectively.

     Petitioner’s conviction for filing false tax returns for

1991 and 1992, although not dispositive of the fraud issue, is a

factor to be considered in determining fraud.    See Wright v.

Commissioner, 84 T.C. 636, 643-44 (1985).    Petitioner admits that

he is estopped to deny that he willfully omitted $78,454 and

$75,587 of income for 1991 and 1992, respectively, but contends

that he is not estopped to deny the fraud penalty for those

years.    Petitioner concedes that his conviction is relevant

evidence on the issue of fraud.

     The doctrine of collateral estoppel precludes the

relitigation of any issue or fact that was actually litigated and

necessarily determined by a valid and final judgment.    Peck v.

Commissioner, 90 T.C. 162 (1988), affd. 904 F.2d 525 (9th Cir.

1990); Wright v. Commissioner, supra at 639; Wilson v.


     54
      On brief, petitioner agrees that his “conviction for 1991
and 1992 may be considered relevant on the issue of fraud.”
                               - 51 -

Commissioner, T.C. Memo. 2002-234.      Of course, this doctrine

“must be confined to situations where the matter raised in the

second suit is identical in all respects with that decided in the

first proceeding and where the controlling facts and applicable

legal rules remain unchanged.”   Commissioner v. Sunnen, 333 U.S.

591, 599-600 (1948).   “A prior conviction will estop a party from

contesting in a later civil suit any element necessarily

established in the criminal trial.”55     Considine v. United

States, 683 F.2d 1285, 1286 (9th Cir. 1982).

     As the Court of Appeals for the Ninth Circuit concluded, the

intent to avoid tax under section 7206(1) and the filing of a

false return does not require a fraudulent intent.      Id. at 1287;

see Wright v. Commissioner, supra at 641 (overruling a Tax Court

decision and following the Court of Appeals’ holding and

reasoning in Considine).   “Because section 7206(1) does not

require a willful attempt to evade tax, a conviction under

section 7206(1), without more, does not establish fraudulent

intent.”56   Considine v. United States, supra at 1287.    However,


     55
      “[T]he question is whether the issue under section 6653(b)
is ‘identical in all respects’ to that decided under section
7206(1).” Wright v. Commissioner, 84 T.C. 636, 639 (1985).
     56
      The Court of Appeals for the Ninth Circuit did determine
that the prior conviction did estop the taxpayer from contesting
that the return was willfully false and resulted in an
underpayment of tax; proof of falsity is a necessary element of
sec. 7206(1). Considine v. United States, 683 F.2d 1285, 1287
                                                   (continued...)
                                 - 52 -

“a conviction for willful falsification, under section 7206(1),

while not dispositive, will be one of the facts to be considered

in a trial on the merits.”      Wright v. Commissioner, supra at 643-

644 (emphasis added).

     Petitioner argues that comments the judge made during his

criminal sentencing colloquy are “highly persuasive” to whether

he fraudulently evaded the payment of taxes.     We disagree with

petitioner’s argument that statements the judge made during his

criminal sentencing hearing are in some way persuasive on the

issue of whether petitioner fraudulently evaded the payment of

tax.57     See N.Y. v. Julius Nasso Concrete Corp., 202 F.3d 82 (2d



     56
      (...continued)
(9th Cir. 1982).
     57
          Judge Fogel stated:

           But I don’t think the conduct looked at in its
           totality suggests that the reason * * *
           [petitioner] diverted the money was to avoid
           paying money to the Internal Revenue Service. I
           think that’s the finding that the Court would have
           to make. So I think we’re looking at the lower of
           the two [sentencing] calculations.

           *      *       *       *        *       *     *

           The Court has considered the entire 1990, 1991,
           1992, but that there is no intent to evade that’s
           established convincingly by the record. So I
           would find this is a [sentencing] guideline level
           6 which gives the Court an opportunity or gives
           the Court the discretion, rather, to impose
           anywhere from zero to six months incarceration.
                              - 53 -

Cir. 2000); SEC v. Monarch Funding Corp., 192 F.3d 295 (2d Cir.

1999); United States v. Barnette, 10 F.3d 1553 (11th Cir. 1994).

We do not know what evidence that court had before it when making

those comments.   Suffice it to say, the record in this case

clearly and convincingly leads us to the conclusion that

petitioner intended to fraudulently evade the payment of his

taxes for 1990, 1991, and 1992.

     Petitioner also argued that assessment is barred by section

6501(a), as the period of limitations for assessing tax had

expired.   Since we have held that respondent has established by

clear and convincing evidence that petitioner underpaid his tax

liabilities for 1990, 1991, and 1992 and that such underpayments

were due to fraud, the statute of limitations does not bar

respondent’s assessment and collection activities.   See sec.

6501(c)(1); Plunkett v. Commissioner, 465 F.2d 299 (7th Cir.

1972), affg. T.C. Memo. 1970-274; DiLeo v. Commissioner, 96 T.C.

at 880.



                                    Decision will be entered

                                  under Rule 155.
                                                                           - 54 -
APPENDIX “A”

 THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
 DEPOSITS - 1990

   Deposit     Deposit                 Check

     Date      Amount     Check Date   Number    Check Amount              Payor                    Check Memos                 Comments             Less Cash
   01/03/90     $6,182.32                            $6,182.32           Unknown
   01/11/90     $9,737.66 01/05/90     1304            $349.66       BAMA Equipment                      Parts             Payable: Alviso Rock
                           01/02/90    17156         $8,400.00      P.S.B. Trucking Inc.
                           01/03/90     816            $200.00 Louis W. & Marion E. Bewley
                           01/08/90    1616            $550.00    Piazza Mobil Sweeping               Yard Rent
                           01/03/90    61526           $238.00 American Business Ins. Brokers                            Payable: Gerald E. Waller
   01/26/90     $4,674.66 01/09/90      825            $200.00 Louis W. & Marion E. Bewley
                                                                                                   Rent 1-22-90 thru
                            01/18/90    3187         $1,450.00         Neil & Betsy Holets             2-22-90
                            1/22/90     839           $200.00    Louis W. & Marion E. Bewley
                            01/12/90    5624            $25.00   Tri City Truck Parts and Equip   Refund Straight line
                            01/25/90    5583          $300.00            Alviso Rock Inc.
                            01/12/90    1311          $349.66           BAMA Equipment                  Parts             Payable to Alviso Rock
                            01/24/90    4096         $2,150.00    George Maciel Trucking Inc.          Re: ???
                                                                                                  Feb Rent-Balance of
   02/14/90     $5,450.00   02/01/90    1036          $250.00          Daniel Parquette                Account
                            02/07/90     376          $500.00           James Morrow
                            02/06/90    19288         $200.00            Marion Bewley                                        Money Order
                            02/06/90   9014592       $4,500.00            Taco Bravo                                         Cashiers Check
   02/28/90     $1,000.00                                $0.00   Correction of 2/28/90 Deposit
   02/28/90     $7,248.22   02/21/90     860          $600.00    Louis W. & Marion E. Bewley
                            02/10/90    3220         $1,450.00        Neil & Betsy Holets           2/22/90-3/22/90
                            02/16/90   309695        $4,380.14    State Farm Mutual Auto Ins                             Payable: Alviso Rock Inc.
                            02/09/90   326862        $1,818.08    State Farm Mutual Auto Ins                               Payable: Alviso Rock
   03/08/90     $7,346.21   03/03/90    1053          $459.00          Daniel Parquette                Mar Rent
                            03/06/90   8122797       $1,936.02     California Land Title Co.      Escrow 284613-LM
                            03/02/90    34428        $1,150.00     South Bay Transportation
                            03/01/90    10194        $2,451.53          Alviso Rock Inc.
                            03/02/90    1360          $349.66          BAMA Equipment                    Parts
                                                                         - 55 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1990

 Deposit    Deposit                   Check

  Date      Amount       Check Date   Number    Check Amount               Payor                Check Memos               Comments               Less Cash
                          03/06/90     1366           $600.00        BAMA Equipment              March Rent
                          03/06/90      889           $400.00 Louis W. & Marion E. Bewley
 03/16/90    $1,752.00                 83508            $2.00       Revlon Beauty Care
                          03/11/90      900           $200.00 Louis W. & Marion E. Bewley
                          03/08/90     1678           $550.00     Piazza Mobil Sweeping           Rent Yard
                          03/14/90     1370         $1,000.00        BAMA Equipment
 04/04/90    $3,474.10    04/03/90     1412         $1,000.00        BAMA Equipment
                          03/29/90     2294         $2,474.10  George Maciel Trucking Inc.
 04/17/90    $1,917.87    04/05/90      429            $18.25         James Morrow                Phone Bill
                          04/11/90      130            $75.74          Daniel Estacio               PGE
                          04/12/90      939           $200.00 Louis W. & Marion E. Bewley
                          04/05/90      927           $200.00 Louis W. & Marion E. Bewley
                          04/09/90     1707           $550.00     Piazza Mobil Sweeping            Yard Rent
                          04/05/90    8123340         $873.88    California Land Title Co.     Escrow 287641-LM
 04/30/90    $7,528.49    04/20/90     3286         $1,450.00       Neil & Betsy Holets          4/22 thru 5/22
                          04/23/90      957           $400.00 Louis W. & Marion E. Bewley
                          04/19/90     22834          $109.39 Saratoga Savings & Loan Assoc
                          04/20/90    8123737          $44.42    California Land Title Co.     Escrow 284613-LM
                          04/09/90    418767           $28.95         Fireman's Fund
                          03/14/90    415163          $393.00         Fireman's Fund
                          04/18/90     62372          $154.53 American Business Ins. Brokers
                          04/26/90     10322        $2,474.10         Alviso Rock Inc.
                          04/26/90     2427         $2,474.10  George Maciel Trucking Inc.
 06/19/90    $1,918.45    06/16/90      490           $650.00         James Morrow                   Rent
                          06/12/90     1016           $200.00 Louis W. & Marion E. Bewley
                          06/06/90     1010           $200.00 Louis W. & Marion E. Bewley
                          06/14/90     2678           $386.02  George Maciel Trucking Inc.                        Payable to Daniel B. Estacio
                          06/14/90     2673           $182.43  George Maciel Trucking Inc.                        Payable to Gary Whiteman
                          06/12/90      375           $300.00 Analytical Maintenance Service         Rent
 07/02/90    $3,175.29    06/18/90     1026           $200.00 Louis W. & Marion E. Bewley
                                                                          - 56 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1990

 Deposit    Deposit                    Check

  Date      Amount       Check Date    Number    Check Amount                 Payor               Check Memos                  Comments                Less Cash
                          06/05/90      1132           $500.00         Daniel Parquette            June Rent
                                        11572            $1.19        Proctor & Gamble              Refund
                          06/28/90      1149         $2,474.10         Alviso Rock Inc.
 07/10/90      $876.47    07/03/90      1145           $326.47         Daniel Parquette         July Rent AC Repair
                          07/06/90      1846           $550.00      Piazza Mobil Sweeping            Yard Rent
 07/18/90    $1,850.00    07/06/90      1045           $200.00   Louis W. & Marion E. Bewley
                          07/16/90       528           $650.00          James Morrow                   Rent
                          07/17/90      10074        $1,000.00        Bill's Trucking Inc.                            Payable: Newark Truck & Body
 08/06/90    $5,878.36    07/26/90      2884         $2,503.80   George Maciel Trucking Inc.
                          07/31/90      1230         $2,474.56         Alviso Rock Inc.
                                         248           $500.00         Daniel Parquette              Aug Rent
                          07/26/90       445           $400.00             Rex A. Hill
 08/15/90    $5,263.73    08/13/90      1640           $600.00        BAMA Equipment               August Rent
                          08/08/90      1870           $550.00      Piazza Mobil Sweeping
                          08/10/90      1071           $200.00   Louis W. & Marion E. Bewley           Rent
                          08/04/90      1063           $200.00   Louis W. & Marion E. Bewley           Rent
                          08/08/90    71088335         $113.73     American Express Travel                             Payable: Tri-City Truck Parts
                          08/13/90      6911         $1,600.00        Curt Biro Trucking             Sleeper          Payable: Newark Truck & Body
                          08/06/90      4649         $1,000.00             Taco Bravo
                          08/13/90      1641         $1,000.00        BAMA Equipment
                                                                                                                         Payable: George Maciel
 08/17/90    $1,571.77    07/31/90     63618         $3,143.54 American Business Ins. Brokers                                Trucking Inc
                                                    $(1,571.77)          Less Cash                                                                      $(1,571.77)
 08/27/90     $150.00                                     $0.00 Correction of 8/27/90 Deposit
 08/27/90    $2,720.00    08/17/90      557            $650.00         James Morrow                    Rent
                          08/20/90      986          $1,000.00   Joyce Lavrar/Terence Perry          Thanks
                                                                                                  Rent 8-20-90 to
                          08/21/90     1135           $720.00         J.S.J. Pipeline Co.           10-30-90
                          08/22/90     8945           $500.00    Richard Moneymaker Lowbed                            Payable: Newark Truck & Body
 09/07/90    $5,423.00    08/30/90     3090          $2,506.50   George Maciel Trucking Inc.
                          08/30/90     1329          $2,506.50         Alviso Rock Inc.
                          08/03/90    766199            $10.00          Fireman's Fund
                                                                         - 57 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1990

 Deposit    Deposit                    Check

  Date      Amount        Check Date   Number   Check Amount               Payor               Check Memos                Comments               Less Cash
                           08/17/90     1081          $200.00   Louis W. & Marion E. Bewley        Rent
                           08/24/90     1082          $200.00   Louis W. & Marion E. Bewley        Rent
 09/14/90     $2,070.74    09/05/90     1124        $2,000.00         Merced Rosales
                           09/13/90     1202           $70.74       Mission Valley Diesel
 09/25/90     $1,214.32    09/14/90     1107          $200.00   Louis W. & Marion E. Bewley         Rent
                           09/16/90      186           $72.00         Marilyn Michelet
                           09/14/90     1676          $471.16        BAMA Equipment
                           09/21/90     1684          $471.16        BAMA Equipment
 10/05/90     $5,013.00    09/27/90     1390        $2,506.50         Alviso Rock Inc.
                           09/27/90     3210        $2,506.50   George Maciel Trucking Inc.
 10/17/90     $4,795.39    10/16/90      609          $650.00          James Morrow                Rent
                           10/13/90     1192          $600.00           G & S Paving           Hood for Truck     Payable: Newark Truck & Body
                           10/06/90     1228          $500.00         Daniel Parquette           Oct Rent
                           09/21/90     4371          $900.07    L.R. Sellars Jr. Insurance       RP End             Payable: Plymouth Inc.
                           10/04/90     4000          $653.00       Daniel Hernandez Jr.
                           10/05/90     1724          $471.16        BAMA Equipment                                   Payable: Alviso Rock
                           10/12/90     1730          $471.16        BAMA Equipment                                   Payable: Alviso Rock
                           10/08/90     1911          $550.00      Piazza Mobil Sweeping
 10/31/90      $942.32     10/26/90     1746          $942.32        BAMA Equipment                                  Payable to Alviso Rock
 12/13/90     $3,203.00    11/30/90     4075          $653.00       Daniel Hernandez Jr.
                           12/07/90     1942          $550.00      Piazza Mobil Sweeping
                           12/06/90     12853       $2,000.00     P&C Auto Wreckers Inc.      90 Toyota P/U 4x4
 12/19/90     $2,270.00    12/17/90     1784          $600.00        BAMA Equipment
                           12/07/90     1187          $400.00   Louis W. & Marion E. Bewley        Rent
                           12/16/90      654          $670.00          James Morrow               Phone
                           12/14/90     1188          $600.00   Louis W. & Marion E. Bewley        Rent
 12/31/90      $693.02                                $693.02         Interest for Year
 TOTAL      $105,340.39                           $105,340.39                                                                                     $(1,571.77)
                                                                   - 58 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1991

Deposit    Deposit     Check       Check     Check                                                                                                  Less
  Date     Amount       Date      Number     Amount                    Payor                  Check Memos                    Comments               Cash
01/03/91    $5,013.00 12/27/90     1710       $2,506.50          Alviso Rock, Inc.
                      12/27/90     3757       $2,506.50    George Maciel Trucking Inc.
02/06/91    $5,552.12 01/11/91     1225        $200.00             Louis Bewley                   Jan 92
                      01/31/91     1236        $200.00             Louis Bewley                   Jan ??
                      01/18/91     1226        $200.00             Louis Bewley                   Jan ??
                      01/25/91     3901       $2,476.06    George Maciel Trucking Inc.
                      01/24/91     1776       $2,476.06          Alviso Rock, Inc.
02/20/91    $1,937.53 02/19/92      699        $650.00            James Morrow                     Rent
                      02/15/91   251175006     $634.53              Leslie Salt                                     Payable: Newark Truck & Body
                      02/06/91     4130        $653.00        Daniel Hernandez, Jr.
02/21/91    $5,502.43 02/06/91     4484       $4,777.43        Hawaiian Insurance         M.A.C. Contracting Inc.   Payable: Newark Truck & Body
                      02/19/91     4499        $725.00         Hawaiian Insurance         M.A.C. Contracting Inc.   Payable: Newark Truck & Body
03/13/91    $2,203.00 03/08/91     1264        $400.00             Louis Bewley                  Feb 2&3
                      03/07/91     9747        $500.00    Richard Moneymaker Lowbed                                 Payable: Newark Truck & Body
                      03/02/91      613        $100.00            Larry Kauffman
                      03/11/91     1982        $550.00        Piazza Mobil Sweeping
                      03/11/91     4136        $653.00        Daniel Hernandez, Jr.
03/28/91    $3,924.95 03/12/91     18455       $174.95    Tax Collector, Alameda County          9213124
                      03/08/91     6571       $2,350.00       M.A.C. Contracting Inc                                Payable: Newark Truck & Body
                      03/24/91     1275        $400.00             Louis Bewley                  #1 & #4
                                              $1,000.00              Unknown                                        Math Error? 3/28 DM of $1,000
04/04/91    $4,952.12 03/28/91     1954       $2,476.06          Alviso Rock, Inc.
                      03/28/91     4153       $2,476.06    George Maciel Trucking Inc.
04/10/91    $2,350.00 04/09/91     1884       $1,800.00         BAMA Equipment            Rent Jan Feb Mar 1991
                      04/09/91     1992        $550.00        Piazza Mobil Sweeping                Rent
04/26/91    $2,753.00 04/10/91     4160        $653.00        Daniel Hernandez, Jr.
                      04/15/91     732         $650.00            James Morrow                     Rent
                      04/05/91     306         $200.00            Merced Rosales
                      04/18/91     123         $850.00     Lovett Excavating and Paving         Pete Hood
                      04/12/91     1294        $200.00             Louis Bewley
                      04/05/91     1289        $200.00             Louis Bewley
                                                                   - 59 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1991

 Deposit   Deposit     Check     Check      Check                                                                                              Less
  Date     Amount       Date     Number     Amount                   Payor                  Check Memos                  Comments              Cash

05/06/91    $4,773.77 04/27/91    1306        $200.00             Louis Bewley                   Rent
                      04/19/91    3921       $3,203.77   Winston Hill Assurance Co Ltd
                      04/19/91    3922       $1,370.00   Winston Hill Assurance Co Ltd
05/09/91    $2,271.96 05/06/91    26698       $221.96              LMC Metals                                     Payable: Valley Recycling
                      05/06/91     94         $550.00        Piazza Mobil Sweeping
                      05/01/91    1338       $1,500.00          Daniel Parquette
05/21/91    $2,047.95 05/16/91     751        $650.00            James Morrow                   Rent
                      05/20/91    1356        $975.00          J.S.J. Pipeline Co.        Rent May June July
                      05/18/91    1316        $300.00             Louis Bewley
                      05/15/91    33460       $122.95       Stewart Title of California
06/04/91    $9,394.92 05/23/91    1933       $2,000.00         BAMA Equipment             April May June Rent
                      06/04/91    2036        $550.00        Piazza Mobil Sweeping
                                   532        $700.00        Ricky and Anna Flores            June Rent
                      05/27/91    1322        $200.00             Louis Bewley
                      05/31/91     161       $1,000.00            HG Trucking                Advance Pmt
                      05/30/91    2101       $2,472.46          Alviso Rock, Inc.
                      05/30/91    1477       $2,472.46    George Maciel Trucking Inc.
06/13/91    $1,860.50 06/07/91    1333        $200.00             Louis Bewley
                      06/10/91    4202        $653.00    Daniel & Cecelia Hernandez Jr.
                      06/10/91    10203      $1,007.50    Richard Moneymaker Lowbed                             Payable: Newark Truck & Body
07/09/91    $1,353.00 07/05/91     556        $700.00        Ricky and Anna Flores
                      07/01/91    4207        $653.00    Daniel & Cecelia Hernandez Jr.
08/05/91    $1,497.00                        $1,000.00              Unknown                                      Returned ck 8/9 DM $1,000
                                              $497.00               Unknown
08/13/91    $1,000.00 08/03/91    568         $700.00        Ricky and Anna Flores               Rent
                      08/02/91    1357        $300.00             Louis Bewley                   Rent
08/21/91    $1,000.00                        $1,000.00              Unknown
09/09/91    $6,443.92 08/29/91     3030      $2,472.46          Alviso Rock, Inc.
                      08/29/91     3121      $2,472.46    George Maciel Trucking Inc.
                      08/30/91   20912534    $1,499.00          State of California           Tax Refund
09/11/91   $14,018.44 09/05/91     8054      $4,000.00       M.A.C. Contracting Inc                             Payable: Newark Truck & Body
                                                                      - 60 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1991

 Deposit   Deposit      Check       Check    Check                                                                                                             Less
  Date     Amount        Date       Number   Amount                     Payor                        Check Memos                    Comments                   Cash
                       09/09/91      2557     $8,000.00     S & P Truck & Trailer Repair                                   Payable: Newark Truck & Body
                       09/09/91      2105      $550.00         Piazza Mobil Sweeping                 Yard Rent
                       09/07/91      1881      $500.00             C.K. Transport              1/2 Payment Pete Hood
                       09/04/91     960334     $268.44           County of Alameda
                       09/07/91      593       $700.00         Ricky or Ana M. Flores                 Rent
09/24/91     $5,500.00 09/13/91      3431     $5,500.00    Michel K. Pipes Martha J. Baroo      Cummins ??? Engine
                                                                                                                         "Insuff Funds" - debit memo in acct
10/08/91     $1,000.00 09/23/91      1416      $1,000.00             Daniel Parquette             Aug & Sept Rent                       0466
10/08/91     $4,951.25 09/26/91      4983      $2,472.46      George Maciel Trucking Inc.
                       09/26/91      2307      $2,478.79             Alviso Rock, Inc.
11/06/91     $6,526.92               5207      $2,508.46      George Maciel Trucking Inc.
                                     3296      $2,508.46             Alviso Rock, Inc.
                       10/18/91      864        $650.00               James Morrow                      Rent
                       10/18/91      1401       $200.00                Louis Bewley                     Rent
                       10/25/91      1403       $200.00                Louis Bewley                     Rent
                       10/11/91      1396       $200.00                Louis Bewley                     Rent
                       11/02/91      177        $260.00    G & G Express                     Gears
11/22/91     $2,797.43 11/16/91      5396       $442.43    George Maciel Trucking Inc.
                                     1632       $180.00    Mission Valley Diesel
                                    168907      $150.00    Electric & Gas Industries Asso    Refrigerator Rebate
                         11/01/91    3470       $500.00    P.J. Vierra                       Rent on Boscell
                                     1596       $975.00    J.S.J. Pipeline Co.               Office Rent Oct, Nov, Dec
                       11/08/91      2174       $550.00    Piazza Mobil Sweeping             Rent
12/03/91     $5,615.12                         $5,615.12   Unknown
12/31/91      $755.42 12/31/91                  $755.42    Interest for the Year
 TOTAL     $106,995.75                       $106,995.75                                                                                                        $0.00
                                                                     - 61 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1992

               Deposit                  Check    Check
Deposit Date   Amount      Check Date   Number   Amount                   Payor                     Check Memos               Comments            Less Cash
                                                                                                                             Payable: Roger
 01/06/92        $512.35    01/03/92     6651     $112.35           Alviso Rock, Inc.                                           Balmeda
                            12/23/91     1438     $200.00             Louis Bewley                       Rent
                            12/13/91     1429     $200.00             Louis Bewley                       Rent
 02/06/92      $7,155.92    02/01/92     1467    $1,200.00            Louis Bewley                       Rent
                            01/31/92     5617    $2,508.46     George Maciel Trucking, Inc.
                            01/31/92     2530    $2,472.46          Alviso Rock, Inc.
                                                                                                Office Rent Jan Feb Mar
                            02/05/92     1710     $975.00           J.S.J. Pipeline Co.                   '92
 02/12/92      $2,953.00    02/05/92     2151    $1,500.00          BAMA Equipment                       Annual
                            02/10/92     4359     $653.00          Daniel Hernandez Jr.
                            02/06/92     1979     $250.00    Charles A. Lamb & Rose C. Lamb
                            02/10/92     2268     $550.00         Piazza Mobil Sweeping               Yard Rent
 02/26/92      $3,244.89    02/25/92     216      $500.00              Collette Krull
                            02/13/92     6943     $349.84     Robertson Trucking Service, Inc      for Bett's Springs
                                         949      $650.00             James Morrow                       Rent
                                                                                                                          Payable: Newark Truck
                            02/18/92     371      $450.00      San Jose Equipment Sales                                          & Body
                            02/08/92     1473     $200.00             Louis Bewley
                            02/15/92     1482     $200.00             Louis Bewley                       Rent
                            02/21/92     6954     $395.05    Robertson Trucking Service, Inc
                            02/01/92     3530     $500.00              P.J. Vierra                Rent on Boscell Rd
 03/04/92      $6,241.17    02/28/92     5727    $2,472.46    George Maciel Trucking, Inc.
                            02/28/92     2589    $2,472.46          Alviso Rock, Inc.
                                                                                                                          Payable: Joe Gonzales
                            02/27/92    95687    $1,296.25    North Carolina Occidental Fire          All Claims                    Jr.
 03/13/92      $4,516.00    03/06/92    1500      $200.00             Louis Bewley                       Rent
                                                                                                                          Payable: Newark Truck
                            03/05/92    21350     $168.00    Von Euw & L.J. Nunes Trucking                                       & Body
                            03/11/92    1033      $200.00           Steven M. Taylor                    Rent
                            03/05/92    2290      $550.00        Piazza Mobil Sweeping                Yard Rent
                            03/09/92    3618      $300.00           Michel K. Pipes
                            03/11/92    6695     $3,098.00          Alviso Rock, Inc.                    DMV
                                                                     - 62 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1992

               Deposit                Check      Check
Deposit Date   Amount    Check Date   Number     Amount                   Payor                     Check Memos                Comments           Less Cash
 03/25/92       $4,250.00 03/16/92     1018       $150.00    Pacific Water Truck & Equipment         Truck Steps
                          03/20/92     1512       $200.00              Louis Bewley                     Rent
                                                                                                                          Payable: Newark Truck
                           03/13/92     9447     $3,250.00       MAC Contracting Inc.                                            & Body
                           03/15/92     963       $650.00            James Morrow                        Rent
 04/01/92      $5,614.36   03/26/92     3634      $300.00            Michel K. Pipes                Rent Paid in full
                           03/11/92   61741206    $369.44                 AT&T                 Residence Service Refund
                           03/27/92     2649     $2,472.46          Alviso Rock, Inc.
                           03/27/92     5859     $2,472.46     George Maciel Trucking, Inc.
 04/07/92      $1,850.00   03/28/92     1514      $200.00             Louis Bewley                       Rent
                           03/29/92     714       $400.00          Ricky or Ana Flores
                           04/03/92     2022      $250.00             Charles Lamb                       Rent
                           04/03/92     1979     $1,000.00      Stockton Semi Trailer Inc.
                                                                                                                          Payable: Newark Truck
 04/16/92      $5,832.69   04/08/92    52280     $2,850.00          F.B. Hart Co. Inc.                                           & Body
                                                                                                                            Payable: George
                           04/07/92   32060115   $1,484.26           The Travelers             Complete & final Settlement Maciel Trucking Inc
                           04/10/92     4395      $653.00         Daniel Hernandez Jr.
                           04/05/92     2308      $550.00        Piazza Mobil Sweeping                 Yard Rent
                                                                                                 Settlement of Property     Payable: George
                           04/07/92   32060106    $295.43            The Travelers                      Damage             Maciel Trucking Inc
                           04/13/92     726       $200.00         Ricky or Ana Flores
                           03/10/92     1522      $200.00             Louis Bewley                       Rent
                           04/12/92     611       $100.00          Dad's Enterprises
                           04/16/92     5730     $(500.00)      Cashier's Ck to Ann Miller                                                          $(500.00)
 04/21/92      $4,000.00   04/21/92      CM      $4,000.00         Dad's Enterprises                   Transfer
 05/07/92      $5,754.42   05/01/92     6036     $2,481.96     George Maciel Trucking, Inc.
                           05/01/92     2723     $2,472.46          Alviso Rock, Inc.
                           04/28/92     738       $400.00         Ricky or Ana Flores
                           05/01/92     1535      $200.00             Louis Bewley                       Rent
                           04/24/92     1530      $200.00             Louis Bewley                       Rent
 05/15/92      $2,378.00   05/13/92     1847      $975.00          J.S.J. Pipeline Co.               Office Rent
                           05/10/92     743       $200.00         Ricky or Ana Flores                    Rent
                                                                        - 63 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1992

               Deposit                  Check        Check
Deposit Date   Amount   Check Date      Number      Amount                  Payor                     Check Memos              Comments          Less Cash
                         05/10/92        4417         $653.00        Daniel Hernandez Jr.
                         05/12/92        2319         $550.00       Piazza Mobil Sweeping               Yard Rent
 06/04/92      $5,954.42 05/29/92        2782       $2,472.46          Alviso Rock, Inc.
                         05/29/92        6210       $2,481.96     George Maciel Trucking, Inc.
                                                                                                                            Payable: Ricardo
                           06/01/92      95756      $1,000.00              Mike Flores                Cashier's Check           Flores
 07/06/92      $7,949.48   06/15/92      1033        $600.00             James Morrow                   May Rent
                           06/12/92      1568        $200.00              Louis Bewley                     Rent
                           06/05/92      1567        $200.00              Louis Bewley                     Rent
                           07/03/92      1580        $200.00              Louis Bewley                     Rent
                           06/26/92      1577        $200.00              Louis Bewley                     Rent
                           06/11/92      2340        $550.00        Piazza Mobil Sweeping               Yard Rent
                           06/26/92      6415       $2,481.96     George Maciel Trucking, Inc.
                           06/23/92   60250008305   $1,045.06      Farmers Insurance Group                                 Payble: Alviso Rock
                           06/26/92      2849       $2,472.46           Alviso Rock, Inc.
 08/04/92      $3,181.96   07/31/92      6662       $2,481.96     George Maciel Trucking, Inc.
                           07/27/92                  $300.00           Dad's Enterprises               Rent on Yard
                           07/10/92      1587        $200.00              Louis Bewley                    Rent
                           07/17/92      1588        $200.00              Louis Bewley                    Rent
 10/09/92      $8,710.79   10/02/92      3077       $2,478.79           Alviso Rock, Inc.
                           09/24/92    22750409     $5,032.00          State of California              Tax Refund
                           10/01/92      838         $700.00               Ana Flores                   Oct 92 Rent
                           09/25/92      1639        $200.00              Louis Bewley                     Rent
                           10/01/92      839         $100.00               Ana Flores              Back Rent $40 Balance
                           10/02/92      1641        $200.00              Louis Bewley                     Rent
 10/21/92      $4,638.29   10/07/92      7116       $2,488.29     George Maciel Trucking, Inc.
                           10/15/92     56812       $1,000.00   Bank of Agriculture Cashier's Ck      Rent Oct & Nov
                           10/11/92      3579        $500.00             Linda Ventura                  Sept Rent
                           10/15/92      1093        $650.00             James Morrow                      Rent
 11/10/92      $1,525.00   11/04/92      2499        $550.00        Piazza Mobil Sweeping               Yard Rent
                           11/06/92      2064        $975.00          J.S.J. Pipeline Co.              Office Rent
                                                                     - 64 -

THE BANK OF MILPITAS ACCOUNT 512-001-200593 "GEORGE A. MACIEL"
DEPOSITS - 1992

               Deposit                   Check     Check
Deposit Date   Amount       Check Date   Number    Amount                 Payor               Check Memos        Comments           Less Cash
                                                                                                            Payable: Newark Truck
 12/07/92       $7,670.42    11/20/92     1824      $344.00         Carlton Trucking          MC-2 Repair          & Body
                                          3208     $2,508.46        Alviso Rock, Inc.
                             12/02/92     2521      $550.00      Piazza Mobil Sweeping         Rent Dec
                             11/30/92     551       $650.00     Margaret or Kelvin Deemer        Rent
                             12/03/92     9484     $2,517.96   George Maciel Trucking, Inc.
                             11/20/92     1676      $200.00           Louis Bewley               Rent
                             11/13/92     1675      $200.00           Louis Bewley               Rent
                                                                                                             Bounced - 12/15/92
                             12/05/92     879       $700.00             Ana Flores                                 DM
 12/31/92        $339.64     12/31/92               $339.64          Interest for Year
  TOTAL        $94,272.80                         $94,272.80                                                                          $(500.00)
                                                                                - 65 -
APPENDIX “B”

 THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
 DEPOSITS - 1990

                 Deposit                  Check
 Deposit Date    Amount    Check Date     Number     Check Amount                Payor                     Check Memos                   Comments              Less Cash
  01/03/90       $22,271.15 01/02/90                       $490.00          James Morrow                    Rent & Elect
                            12/22/89      5551           $1,024.15          Alviso Rock Inc
                            12/27/89      3895           $1,000.00      George Maciel Trucking        Reimburse for DMV Fees
                            12/29/89      1298          $10,000.00         BAMA Equipment                Shareholder Draw
                            12/27/89       247           $9,757.00   Atherton & Stevens Trust Acct       Arbitration Award
  01/26/90        $4,903.06 01/25/90      1983           $2,451.53      George Maciel Trucking
                            01/25/90      10127          $2,451.53          Alviso Rock Inc
  01/26/90        $7,500.00 01/19/90      35286          $7,500.00    Sutter Insurance Company       Collision Loss '71 Freuhauf   Payable: Alviso Rock Inc.
  02/14/90       $22,004.93 02/09/90      12142         $15,000.00        Taylor Leasing Inc.                  Gonzalez             Payable: Alviso Rock
                            02/09/90      1332             $600.00         BAMA Equipment                   February Rent
                            08/25/89      3259           $4,447.40      George Maciel Trucking                                        Payable: Fred Isit
                            02/07/90      1667             $550.00      Piazza Mobil Sweeping                Rent Yard
                                          2011             $147.09      George Maciel Trucking                                      Payable: H. Gonzales
                              01/26/90    1321             $349.66         BAMA Equipment                      Parts                Payable: Alviso Rock
                              02/02/90    1328             $349.66         BAMA Equipment                      Parts                Payable: Alviso Rock
                              02/09/90    1331             $349.66         BAMA Equipment                      Parts                Payable: Alviso Rock
                                          2040             $211.46      George Maciel Trucking                                       Payable: Gonzales
  02/28/90        $6,711.13   02/23/90    1355             $349.66         BAMA Equipment                      Parts                Payable: Alviso Rock
                              02/25/90    2113           $2,451.53      George Maciel Trucking
                                                                                                     Property Damage and Down
                              02/19/90   400270136       $3,909.94      Progressive Companies                   Time                Payable: Alviso Rock
                                                                                                                                   Payable: George Maciel
  03/19/90        $6,500.00   03/17/90     426          $13,000.00        Daniel Hernandez                                             Trucking Inc
                                                                         1/2 deposited to acct
                                                        $(6,500.00) 001-300431 "George P. Maciel"                                                               ($6,500.00)


  03/20/90      $100,000.00   03/20/90      CM         $100,000.00    Time Certificate of Deposit
  05/09/90        $5,473.98   04/27/90     965            $200.00           Louis Bewley
                              04/30/90     1057           $250.00         Charles A. Lamb
                              05/05/90     151            $450.00          Daniel Estacio                   Home Rent
                              04/27/90     1449           $357.66        BAMA Equipment                                             Payable to Alviso Rock
                                                                           - 66 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1990

               Deposit                 Check
Deposit Date   Amount    Check Date    Number   Check Amount              Payor               Check Memos             Comments            Less Cash
                          04/24/90      46568       $2,616.32     Grade-Way Construction                         Payable to Alviso Rock
                          05/03/90      1461        $1,000.00        BAMA Equipment
                          05/03/90      1460          $600.00        BAMA Equipment               Rent
 05/24/90       $6,317.00 05/18/90      3145       $14,017.00          US Treasury
                                                   $(7,700.00)          Cash Back                                                          $(7,700.00)
 06/11/90      $73,495.18   05/16/90    249        $47,495.18          Cashier's Ck
                            04/27/90    179        $25,000.00          Cashier's Ck
                            06/01/90    4573        $1,000.00           Taco Bravo
 06/19/90      $15,000.00   06/19/90               $15,000.00        Travelers Checks                                  30 x $500
                                                                                                                Payable: Newark Truck &
 07/02/90      $20,426.17   06/23/90    1392        $1,952.07        Fleming Transport                                   Body
                            06/28/90    2739        $2,474.10      George Maciel Trucking
                                                                                                                Payable: George Maciel
                            06/26/90    1569       $15,000.00        BAMA Equipment                                    Trucking
                            06/22/90    4601        $1,000.00            Taco Bravo
 07/10/90       $4,050.00   05/07/90    1027         $650.00      Steve Giarusso Trucking          Rent
                            07/05/90    2516         $800.00        Roy's Truck Painting       76 Ford Hood
                            07/03/90    1585        $1,000.00        BAMA Equipment
                            07/03/90    1584         $600.00         BAMA Equipment               July Rent
                            07/02/90    426          $800.00             Rex A. Hill          1/2/ pymnt on …
                            06/29/90    1040         $200.00            Louis Bewley
 07/18/90       $9,600.00   07/18/90                $9,600.00             Currency
 07/24/90       $9,700.00   07/24/90                $9,700.00             Currency
 07/26/90       $9,800.00   07/26/90                $9,800.00             Currency
 09/07/90       $7,500.00   09/06/90    2082        $7,500.00           Cashier's Ck                                Bank of Milpitas
 09/14/90       $5,502.51   09/05/90    3981         $652.51          Daniel Hernandez             Sept
                            09/11/90    1888         $550.00       Piazza Mobil Sweeping
                            09/08/90    1207         $500.00          Daniel Parquette          Sept. Rent
                            09/01/90    1098         $200.00            Louis Bewley              Rent
                            09/11/90    1673         $600.00         BAMA Equipment             Sept Rent
                                                                                                                Payable: Newark Truck &
                                       12249        $3,000.00    Sandman, Inc Star Concrete    Invoice #102              Body
                                                                             - 67 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1990

               Deposit                   Check
Deposit Date   Amount       Check Date   Number   Check Amount               Payor                  Check Memos                  Comments               Less Cash
                                                                                                                            Payable: George Maciel
 09/25/90       $4,502.00    09/11/90    64208        $4,502.00 American Business Ins Brokers                                   Trucking Inc
 10/05/90       $6,261.70    10/04/90    1722          $600.00         BAMA Equipment                  Oct Rent
                             09/28/90    1122          $200.00           Louis Bewley                   Rent
                             09/21/90    1121          $200.00           Louis Bewley                   Rent
                             10/05/90    1504         $1,000.00   Hillview Engineering Corp           Advertising
                                                                                                                           Payable to Newark Body
                             09/24/90     9050         $500.00    Richard Moneymaker Lowbed                                         Shop
                             09/28/90     1710         $471.16           BAMA Equipment
                             08/25/89     4085        $2,290.54      George Maciel Trucking                                   Payable to Fred Isit
                             09/02/90     4694        $1,000.00              Taco Bravo
 10/12/90      $40,000.00    10/12/90      CM        $40,000.00               Unknown
 10/23/90       $1,600.00    10/23/90                 $1,200.00               Unknown                                              ABA 11-35
                                                       $200.00                Unknown                                              ABA 11-57
                                                       $200.00                Unknown                                              ABA 11-57
 11/01/90       $1,200.00    10/20/90     1527        $1,200.00     Hillview Engineering Corp                             "Insuff Funds" - ck bounced
 11/01/90       $5,013.00                             $5,013.00               Unknown
 11/14/90      $10,256.07    11/02/90     1149         $200.00              Louis Bewley
                             11/09/90     1161         $200.00              Louis Bewley                 Rent
                             11/09/90     630          $650.00             James Morrow                  Rent
                             11/09/90     1928         $550.00       Piazza Mobil Sweeping
                                                                                                                            Payable: George Maciel
                             11/06/90     1400        $1,400.00           Alan Hosking              125 Northgate               Trucking Inc
                             11/09/90     1760        $1,000.00        BAMA Equipment
                             11/09/90     1203         $975.00         J.S.J. Pipeline Co.      Rent Office Nov Dec Jan
                             11/07/90     4065         $653.00         Daniel Hernandez
                             10/17/90     3048        $1,000.00           Money Order                                       Payable to John Alves
                                                                                                                           Payable: Newark Truck &
                             11/10/90     5477        $2,428.07   Wesley E. Bassett Trucking         89 Pete Cab                    Body
                             11/01/90     347         $1,200.00          Jeff Varnel                                          BofA Money Order
 11/23/90       $5,592.32    11/10/90     1255         $500.00        Daniel Parquette                 Nov Rent
                             11/16/90     1767         $942.32       BAMA Equipment                                          Payable: Alviso Rock
                             11/13/90     4811        $1,000.00          Taco Bravo
                                                                                 - 68 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1990

                Deposit                    Check
Deposit Date    Amount    Check Date       Number     Check Amount              Payor                      Check Memos                  Comments              Less Cash
                           11/21/90         566           $3,000.00         Lavrar Trucking                                                Loan
                           11/21/90         5818            $150.00      George Maciel Trucking                                        Payable: Cash
 11/27/90        $2,800.00 11/26/90         1171            $400.00          Louis Bewley                        Rent
                           11/26/90         1172            $200.00          Louis Bewley                        Rent
                                                                                                      Collision-Final Replacing
                             09/03/90      38433          $2,200.00  Adriatic Insurance Company                 38204
 12/06/90        $7,443.29   11/29/90      1269            $500.00         Daniel Parquette                   Rent Dec
                             11/29/90      3574           $2,506.50    George Maciel Trucking
                             11/29/90      1561           $2,506.50         Alviso Rock Inc
                             12/03/90      21258          $1,500.00 Contract Transportation Service
                             11/13/90      35455           $430.29           Granite Rock                                         Payable: Alviso Rock Inc.
 12/13/90       $67,256.00   11/19/90     2198795        $67,256.00 Transamerica Insurance Group                                    Payable: Alviso Rock
                                                                                                                                   Payable: George Maciel
 12/19/90        $8,644.10   12/10/90     400716766       $8,644.10      Progressive Companies              Legal Billing                 Trucking
                                                                                                                                   Payable: George Maciel
 12/27/90        $3,594.14   12/19/90      65686          $1,310.14    CNA Insurance Companies           Repairs/Downtime                 Trucking
                                                                                                                                  Payable: Newark Truck &
                             12/21/90       5534          $1,034.00    Edron Towing and Recovery       Repair #65 Front End                 Body
                             12/21/90       2453          $1,250.00          Michael Mitchem             Interest on Loan
 12/31/90       $15,606.29   12/31/90                    $15,606.29        Interest for the Year
  TOTAL        $516,524.02                              $516,524.02                                                                                           $(14,200.00)



THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1991

                 Deposit                    Check
Deposit Date     Amount      Check Date     Number     Check Amount              Payor                     Check Memos                  Comments              Less Cash
                                                                                                                                  Payable: Newark Truck &
  01/08/91       $3,016.79    12/31/90      15172          $3,016.79       Jess' Trucking Inc.                                             Body
                                                                                                                                  Payable: Newark Truck &
  01/17/91       $3,690.92    01/08/91       3552            $850.51    Osborne Lumber Co. Inc.                 0243                       Body
                              01/08/91       1952            $550.00     Piazza Mobil Sweeping
                              01/11/91       6095            $587.41   George Maciel Trucking Inc.
                                                                              - 69 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1991

               Deposit                   Check
Deposit Date   Amount       Check Date   Number     Check Amount              Payor                     Check Memos                    Comments            Less Cash
                             01/05/91     4116            $653.00      Daniel Hernandez Jr.
                             01/16/91     672             $650.00        James Morrow                        Rent
                             12/31/90     1209            $200.00         Louis Bewley
                             01/04/91     1210            $200.00         Louis Bewley                      Jan #1
                                                                                                                                 Payable: Newark Truck &
 02/14/91      $10,074.02    02/11/91     2543           $384.25         Salinas Trucking         Repair Left Front ?? & Paint            Body
                                                                                                                                 Payable: Newark Truck &
                             12/21/90     1236          $1,000.00   Ken Ash dba Kens Trucking                                             Body
                                                                                                                                 Payable: Newark Truck &
                             02/01/91     4480          $5,067.57    Hawaiian Insurance Group          MAC Contracting                    Body
                             02/09/91     1289           $975.00        J.S.J. Pipeline Co.       Office Rent Feb, Mar, Apr
                             02/07/91     1971           $550.00      Piazza Mobil Sweeping               February
                             02/08/91      606          $1,500.00        Lavrar Trucking                Repairs Mack
                             02/08/91     14124          $597.20           LMC Metals
 02/25/91          $10.00    02/25/91                       $0.00       Deposit Correction
 02/25/91       $5,142.12    02/08/91     1249           $200.00           Louis Bewley                    Rent Feb
                             02/21/91     1847          $2,476.06        Alviso Rock Inc.
                                                        $2,476.06            Unknown
 02/25/91      $13,900.00    02/25/91     1842          $1,000.00       BAMA Equipment                   October 1990
                             02/24/91     1308          $1,000.00        Daniel Parquette
                             02/25/91     1846           $600.00        BAMA Equipment                   Dec 1990
                                                                                                   Reimburse Reliance End
                             02/25/91     1841         $11,300.00       BAMA Equipment                     Dump
                                                                                                                                 Payable: Newark Truck &
 03/01/91       $5,345.80    02/14/91     9645          $1,000.00   Richard Moneymaker Lowbed         Payment on #0240                    Body
                             02/26/91     1349             $90.00       Mission Valley Diesel
                                                                                                                                 Payable: Newark Truck &
                             02/27/91     12831         $2,017.01 Ben Salamoni Trucking Service                                           Body
                                                                                                   Supplement to Repair Inv      Payable: Newark Truck &
                             02/27/91    48153214        $429.39      Wausau Insurance Co.                #0246                           Body
                                                                                                                                 Payable: Newark Truck &
                             02/21/91     11027         $1,809.40        Circo Recyclers                                                  Body
 03/28/91      $12,378.57    03/19/91      716           $650.00          James Morrow                       Rent
                             03/25/91                   $6,250.00      Marcelo Rodriguez Jr.
                                                                           - 70 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1991

               Deposit                 Check
Deposit Date   Amount    Check Date    Number   Check Amount                Payor                   Check Memos                   Comments             Less Cash
                          03/25/91     904802       $5,478.57    State Farm Mutual Auto Ins.       Property Damage
 04/22/91       $4,000.00 04/22/91       CM         $4,000.00    Reversal of 4/19/91 Transfer
                                                                                                                            Payable: Dale Hinson &
 04/26/91      $15,081.35   04/08/91   336113       $3,228.20     Guaranty National Ins co.     Claim for Rodriguez Trkg     Newark Truck & Body
                                                                                                                           Payable: Newark Truck &
                            04/17/91   6800         $2,277.50       MAC Contracting Inc.                                             Body
                            04/09/91   40697        $3,721.86    Adriatic Insurance Company          Collision Final       Payable: Alviso Rock Inc.
                                                                                                                           Payable: Newark Truck &
                            04/04/91   4142          $901.67      Osborne Lumber Co. Inc.                0258                        Body
                            04/25/91   2023         $2,476.06          Alviso Rock Inc.
                                       4297         $2,476.06    George Maciel Trucking Inc.
 05/09/91       $3,721.86   04/09/91   40697        $3,721.86    Adriatic Insurance Company          Collision Final          Redeposit of above
 06/10/91       $1,428.00                           $1,428.00               Unknown
                                                                                                                           Payable: Newark Truck &
 06/13/91       $8,250.00   06/07/91    7250        $8,250.00      MAC Contracting Inc.                                             Body
 07/02/91       $7,853.78   06/25/91    1325         $392.78     Ken Ash dba Kens Trucking
                                                    $7,461.00            Unknown
 07/09/91        $800.00    07/02/91    6838         $800.00     George Maciel Trucking Inc.         DiSalvo Loan
                                                                                                                           Payable: George Maciel
 07/09/91      $40,000.00   06/28/91   991463      $42,887.00        Republic Indemnity             3/4/89 to 3/4/90              Trucking
                            06/28/91               $(2,887.00)           Less Cash                                                                     ($2,887.00)
 07/18/91       $4,332.25   07/09/91    2062          $550.00      Piazza Mobil Sweeping
                            07/16/91    1424          $975.00        J.S.J. Pipeline Co.        Office Rent 8-9 8-10-91
                            07/12/91    126           $100.00         Collette M. Krull                  Loan
                            07/16/91    792           $650.00          James Morrow
                            07/05/91    1348          $200.00           Louis Bewley
                                                                                                                           Payable: Newark Truck &
                            07/12/91    6484         $857.25        Heavy Metal Express                                             Body
                                                    $1,000.00             Unknown
 08/05/91       $7,344.92                           $7,344.92             Unknown
                                                                   Pacific Water Truck &
 08/13/91       $8,050.00   08/09/91    1778          $500.00            Equipment                   18 Farm Lane
                            08/08/91    2086          $550.00      Piazza Mobil Sweeping              Rent Yard
                            08/02/91    1357          $300.00           Louis Bewley                     Rent
                                                                            - 71 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1991

               Deposit                   Check
Deposit Date   Amount       Check Date   Number   Check Amount               Payor                     Check Memos                    Comments             Less Cash
                             08/03/91     568           $700.00      Ricky or Ana M. Flores                Rent
                                                      $6,000.00            Unknown
 08/21/91       $3,274.06                             $3,274.06            Unknown
 09/09/91       $1,679.00    07/19/91     1498           $79.00      Mission Valley Diesel
                             09/03/91     2048          $600.00        BAMA Equipment                    Sept Rent
                                                      $1,000.00            Unknown
                                                                                                                                Payable: George Maciel
 09/24/91      $16,241.00    09/09/91    110752       $1,615.30              USPCI                                                     Trucking
                             09/13/91                $11,613.00      United States Treasury             Tax Refund
                                                                                                                               May have bounced - 10/1
                             09/23/91     1416        $1,000.00         Daniel Parquette              Aug & Sept Rent                   DM
                             09/06/91     1376         $200.00            Louis Bewley                     Rent
                             09/20/91     1864         $310.00    Paul R & Marianne Bourgeois
                             09/13/91     1383         $200.00            Louis Bewley                      Rent
                             09/02/91     4033         $653.00        Daniel Hernandez Jr.
                             09/16/91     836          $650.00           James Morrow                       Rent
 10/08/91       $4,600.70    10/05/91     611          $700.00       Ricky or Ana M. Flores                 Rent
                             09/23/91     1626         $950.00     Cook's Peninsula Pools Inc.    155 Tobin Clark, Hillsboro
                             09/21/91     1895         $500.00           C.K. Transport          Final Payment for Pete Hood
                             10/04/91     938          $600.00             Mary Griffin                  Pool Water
                                                                     Pacific Water Truck &                                     Payable to Newark Truck &
                             10/04/91     1874        $1,850.70            Equipment                     Inv. #0271                       Body
 11/22/91       $4,992.53    11/18/91     894          $650.00           James Morrow                       Rent
                                                      $4,342.53             Unknown
                                                                                                 Any and all property damage
 12/03/91       $7,286.68    11/12/91    10015        $7,286.68 John Deere Insurance Company                   cl
 12/16/91       $2,940.60    12/01/91    3491          $500.00           P.J. Vierra                Rent on Boscell Dec.
                                                                                                   Supplemental Payment        Payable: Newark Truck &
                             11/01/91     6806        $2,200.60   Calfarm Insurance Company               Collision                     Body
                                                                                                                               Payable: Newark Truck &
                             12/12/91     1125           $40.00         Gerardo Ozuna            Ozuna Trucking Parts-Step              Body
                             12/06/91     1422         $200.00           Louis Bewley                      Rent
 12/30/91      $10,678.72    12/27/91     2443        $2,508.46         Alviso Rock Inc.
THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1991

                Deposit                   Check                              - 72 -
Deposit Date    Amount       Check Date   Number   Check Amount             Payor                     Check Memos                   Comments            Less Cash
                              12/27/91     5440        $2,508.46 George Maciel Trucking Inc.
                              12/27/91     4055          $250.00 Sines Trucking Company, Inc.        Yard Rent Space
                              12/23/91     21065       $2,329.86 Von Euw & L.J. Nunes Trucking
                              12/20/91     1848          $500.00   Stockton Semi Trailer Inc.              Rent
                                                                                                                              Payable: Newark Truck &
                              12/17/91     911            $88.94       Ferma Corporation          Balance on Hood repair               Body
                                                                                                                              Payable: Newark Truck &
                              12/16/91     640         $1,600.00       Ferma Corporation                Job 2989                       Body
                              12/14/91     4306         $653.00      Daniel Hernandez Jr.
                                                                   General Motors Acceptance                                  Payable: Newark Truck &
                              12/20/91    22228         $240.00               Corp                                                     Body
  12/30/91      $20,000.00    12/30/91     CM         $20,000.00      Telephonic Transfer                                         From BM 0593
  12/31/91       $3,095.55    12/31/91                 $3,095.55    Regular Interest for Year
  12/31/91      $12,034.25    12/31/91                $12,034.25     TCD Interest for Year
  TOTAL        $241,243.47                           $241,243.77                                                                                        ($2,887.00)


THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1992

                 Deposit               Check          Check
Deposit Date     Amount   Check Date  Number          Amount                Payor                     Check Memos                   Comments            Less Cash
 01/23/92        $3,053.00 01/10/92    2235             $550.00    Piazza Mobil Sweeping                Yard Rent
                           01/15/92    1888             $500.00     Stockton Semi Trailer               Dec Rent
                           01/17/92     676             $200.00      Ricky or Ana Flores                  Rent
                           01/15/92     932             $650.00         James Morrow                      Rent
                           01/11/92    4338             $653.00        Daniel Hernandez
                           01/11/92     667             $500.00      Ricky or Ana Flores                  Rent
  02/06/92       $8,113.06 02/04/92  271003216        $13,000.00        David Mitchem          Wells Fargo Cashier's Check    Payable: David Mitchem
                           01/28/92    1378             $125.00 Analytical Maintenance Service
                                                                                                                              Payable: Newark Truck &
                              01/29/92     1157          $175.34         Gerardo Ozuna            Hood Ozuna Trucking                  Body
                                                                                                                             Payable: Newark Truck &
                              02/01/92     3057          $200.00     Cirimeless Construction         Peterbuilt Fender                 Body
                              01/31/92     1464          $200.00          Louis Bewley                     Rent
                              01/07/92     621            $12.72     John & Annette Strong
                                                                             - 73 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1992

                Deposit                   Check       Check
Deposit Date    Amount       Check Date   Number     Amount                 Payor                      Check Memos                 Comments            Less Cash
                              01/25/92     1007         $200.00          Steven Taylor                  Money Owed
                              02/07/92     685          $700.00      Ricky or Ana Flores                                      Bounced - 2/14/92 DM
                                                     $(6,500.00)          Less Cash                                                                     $(6,500.00)
  03/03/92     $100,000.00    03/03/92      CM      $100,000.00 Balance from COD #001291269
  03/04/92       $4,821.00    03/03/92     8153       $2,449.00 George Maciel Trucking Inc.                 DMV
                              03/02/92     4373         $653.00       Daniel Hernandez
                              03/02/92     700          $700.00      Ricky or Ana Flores                Feb 92 Rent
                                                                                                                             Payable: Newark Truck &
                              02/26/92     1954         $369.00         Valley Recycling                   2 Doors                    Body
                              03/03/92     1965         $250.00          Charles Lamb
                              03/02/92     701          $200.00       Ricky or Ana Flores              March Rent 92
                              02/29/92     1494         $200.00           Louis Bewley                      Rent
                                                                Cashier's Ck to Santa Clara Title   "Not used for intended
  03/04/92     $136,945.68    03/03/92     5437     $136,945.68                Co                         purpose"
                                                                                                                             Payable: Newark Truck &
  04/24/92       $1,940.00    04/15/92     20417       $890.00          D. Hill Trucking                Invoice 0280                  Body
                              04/20/92     0567        $200.00 Alameda Truck Parts & Equip
                              04/15/92      978        $650.00          James Morrow                        Rent
                              04/17/92     1526        $200.00           Louis Bewley                       Rent
  05/15/92       $7,657.22    03/20/92    8140454     $7,657.22    California Land Title Co.        Escrow No. 331486-LM
  06/03/92     $100,000.00    06/03/92      CM      $100,000.00   Balance from #01-201318
  06/04/92       $1,625.00    05/13/92    124210       $325.00 Trammell Crow Residential Serv
                              05/22/92     2174        $500.00         Valley Recycling
                              05/22/92     1547        $200.00           Louis Bewley                       Rent
                              05/29/92     1548        $200.00           Louis Bewley                       Rent
                              05/15/92     1544        $200.00           Louis Bewley                       Rent
                              05/08/92     1543        $200.00           Louis Bewley                       Rent
  06/12/92       $1,972.66                 1014        $650.00          James Morrow
                                                                                                                             Payable: Newark Truck &
                              06/05/92    19680       $1,322.66          D. Hill Trucking                                             Body
                                                                          - 74 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1992

               Deposit                  Check      Check
Deposit Date   Amount   Check Date      Number     Amount                   Payor                   Check Memos                  Comments             Less Cash
  7/23/92      $9,144.50 07/13/92        2375        $550.00       Piazza Mobil Sweeping              Yard Rent
                         07/04/92      24543668      $672.00          State of California               EDD                Payable: Felix Dominguez
                         07/06/92        758         $700.00             Ana Flores
                            07/10/92     4466        $653.00        Daniel Hernandez
                            07/15/92     1050        $650.00         James Morrow                        Rent
                            07/02/92     1684       $2,000.00   Truck Trailer Sales, Inc.
                            06/27/92    46949          $49.50 Washington Hospital Healthcare
                            07/14/92   25130367     $3,870.00         Ritchie Bros.
  08/04/92     $57,472.00   07/31/92    996887     $57,472.00      Republic Indemnity           Policy Workers Comp          Payable: Alviso Rock
  08/05/92       $975.00    08/05/92     1931        $975.00         J.S.J. Pipeline           Office Rent July-Sept 92
                                                                                                                           Payable: Newark Truck &
  08/25/92     $15,479.01   08/18/92   102489409   $10,636.37   State Farm Mutual Auto Insur   Property Damage Liability            Body
                            08/07/92     2938       $2,472.46         Alviso Rock, Inc.
                                                                                                                           Payable: Newark Truck &
                            08/13/92    12064        $500.00    Richard Money Maker Lowbed          On Account                      Body
                            08/05/92    2405         $550.00       Piazza Mobil Sweeping                Rent
                            08/11/92    25099         $17.18               PG&E                    Refund Account
                            08/17/92    1066         $650.00           James Morrow                     Rent
                            08/10/92    4493         $653.00          Daniel Hernandez
                                                                                                                            Payable: Moneymaker
  09/08/92      $7,981.78   07/25/92     6574        $728.19    George Maciel Trucking Inc.                                       Lowbed
                            09/02/92     2435        $550.00      Piazza Mobil Sweeping                  Rent
                            09/04/92     2069          $72.00      Mission Valley Diesel
                            08/28/92     2998       $2,472.46        Alviso Rock, Inc.
                            08/27/92      3          $100.00               Dad's
                            08/21/92     1611        $200.00           Louis Bewley                      Rent
                            09/04/92     1622        $200.00           Louis Bewley                      Rent
                            08/26/92     2581        $277.00           Scott Balcon
                            09/03/92     814         $700.00            Ana Flores                    Sept Rent
                                                                            - 75 -

THE BANK OF MILPITAS ACCOUNT 512-001-300466 "GEORGE A. MACIEL"
DEPOSITS - 1992

                Deposit                   Check     Check
Deposit Date    Amount       Check Date   Number    Amount                  Payor                       Check Memos                   Comments            Less Cash
                                                                                                                                Payable: Newark Truck &
                              09/01/92     1709       $200.00           Carlton Trucking              Pete Front Bumper                  Body
                              08/28/92     6882      $2,481.96    George Maciel Trucking Inc.
                                                         $0.17         Deposit Correction
  09/23/92      $18,398.00    09/12/92     4534       $653.00           Daniel Hernandez          That's All Folks! Thank You
                              09/11/92     1631       $200.00             Louis Bewley                        Rent
                              09/11/92              $16,895.00       United States Treasury               Tax Refund
                              09/16/92     1078       $650.00            James Morrow                         Rent
  10/21/92      $20,705.67    10/13/92     1135     $10,381.17   First American Title Insurance     Escrow No. 208810AM
                              10/09/92     134      $10,324.50          Dennis Ponte, Inc
  11/05/92       $4,628.46    11/02/92     533       $1,000.00     Margaret or Kelvin Deemer        Rent + $350 Back Pay
                              11/04/92     864        $700.00              Ana Flores                     Rent Nov
                              10/29/92     1020       $220.00           Dad's Enterprises
                              10/23/92     1649       $200.00             Louis Bewley                       Rent
                              10/30/92     3140      $2,508.46          Alviso Rock, Inc.
  12/10/92       $2,892.90    12/09/92     3065      $2,892.90      Dean and Suzanne Mack
  12/31/92       $3,096.07    12/31/92               $3,096.07      Regular Interest for Year
  12/31/92       $2,593.82    12/31/92               $2,593.82       TCD Interest for Year
  TOTAL        $509,494.83                         $509,494.83                                                                                             $(6,500.00)
                                                                        - 76 -
APPENDIX “C”

   THE BANK OF MILPITAS ACCOUNT 512-001-303171 "G M INVESTMENTS"
   DEPOSITS - 1991

                         Deposit      Check    Check
       Deposit Date      Amount        Date    Number   Check Amount            Payor             Check Memos                    Comments
                                                                                                                     Transfer from 001-3-1856 (per sig
         06/04/91         $1,568.38                         $1,568.38          Unknown                                             card)
         06/05/91         $8,900.00                         $8,400.00          Unknown                                           ABA 90-19
                                                             $500.00           Unknown                                          ABA 90-785
         06/10/91          $250.00                           $250.00           Unknown
         07/09/91         $8,650.00                         $8,650.00          Unknown
         07/18/91          $500.00                           $500.00           Unknown
         08/13/91         $8,900.00 08/01/91   3418          $500.00          P J Vierra         Aug Rent Boscell
                                    08/02/91   20618        $8,400.00    P.S.B. Trucking Inc
         09/06/91            $12.00 09/06/91    DM             $12.00   Reversal of Ck Charge
         09/09/91         $8,900.00 09/01/91   3439          $500.00          P J Vierra         Rent Boscell Sept
                                    09/05/91   10787        $8,400.00    P.S.B. Trucking Inc                            Payable to GM Investments
         10/08/91         $9,100.00 10/01/91   20947        $8,400.00    P.S.B. Trucking Inc                           Payable to M&G Investments
                                    10/01/91   3455          $500.00          P J Vierra         Rent Oct Boscell
                                    09/27/91   1389          $200.00       Louis W. Bewley
         10/16/91         $2,903.00 10/07/91   2134          $550.00    Piazza Mobil Sweeping
                                    10/09/91   1391          $200.00       Louis W. Bewley             Rent
                                    10/11/91   1428         $1,500.00     Daniel T. Parquette                                  ck bounced
                                    10/10/91   4005          $653.00       Daniel Hernandez           OOPS
         12/31/91          $127.69 12/31/91                  $127.69     Interest for the Year
         TOTAL           $49,811.07                        $49,811.07
                                                                 - 77 -

THE BANK OF MILPITAS ACCOUNT 512-001-303171 "G M INVESTMENTS"
DEPOSITS - 1992

                      Deposit     Check     Check    Check
    Deposit Date      Amount       Date     Number   Amount              Payor              Check Memos                 Comments
      01/06/92         $9,150.00 12/27/91   21465     $8,400.00   P.S.B. Trucking Inc.                          Payable to M & G Investments
                                 01/01/92   3509       $500.00          PJ Vierra           Rent on Boscell
                                 01/02/92   1921       $250.00 Charles and Rose Lamb
                                                                   Robertson Trucking
      01/23/92         $4,306.20 01/15/91   6892      $2,493.20          Service
                                 12/30/91    485      $1,813.00 John Deere Insurance Co.                              Insurance claim
      02/06/92         $9,000.00 02/03/92   21690     $8,400.00   P.S.B. Trucking Inc.                          Payable to M & G Investments
                                 01/24/92   1454       $600.00        Louis Bewley              Rent
      02/12/92         $3,500.00 02/10/92    180      $3,500.00     George A. Maciel                                 from acct 300466
      03/06/92         $9,400.00 03/03/92   1952       $500.00 Stockton Semi Trailer Inc
                                 03/06/92   3548       $500.00          PJ Vierra
                                 03/03/92   21859     $8,400.00   P.S.B. Trucking Inc.                          Payable to M & G Investments
      04/07/92         $8,400.00 04/02/92   22003     $8,400.00   P.S.B. Trucking Inc.                          Payable to M & B Investments
      05/07/92         $8,900.00 05/01/92   3595       $500.00          PJ Vierra
                                 05/07/92   22180     $8,400.00   P.S.B. Trucking Inc.                          Payable to M & B Investments
      05/15/92          $350.00 05/07/92    2033       $250.00 Charles and Rose Lamb             Rent
                                 05/11/92    628       $100.00      Dad's Enterprises           R.O. 9
      06/04/92         $8,400.00 06/01/92   22351     $8,400.00   P.S.B. Trucking Inc.                           Payable to GM Investments
      06/12/92          $903.00 06/02/92    2094       $250.00 Charles and Rose Lamb             Rent
                                                                   Daniel and Cecelia
                                 06/06/92   4433       $653.00         Hernandez
      07/06/92         $1,000.00 06/26/92   2351       $500.00 Piazza Mobil Sweeping           Engine 5
                                 06/01/92   3609       $500.00          PJ Vierra          Rent Boscell June
      07/09/92         $8,650.00 07/06/92   22567     $8,400.00   P.S.B. Trucking Inc.                           Payable to GM Investments
                                                                Sines Trucking Company
                                 06/30/92    4277      $250.00             Inc.                  Rent
                                                                  Bank of West money
      07/23/92         $1,364.00 07/15/92    2653      $614.00            order                                Payable to Newark Truck & Body
                                 07/01/92    3627      $500.00          PJ Vierra
                                                                     - 78 -

THE BANK OF MILPITAS ACCOUNT 512-001-303171 "G M INVESTMENTS"
DEPOSITS - 1992

                      Deposit       Check     Check     Check
    Deposit Date      Amount         Date     Number    Amount              Payor             Check Memos                Comments
                                   07/08/92    2116       $250.00 Charles and Rose Lamb         July (92)
                                                                    Richard Moneymaker
      08/04/92          $500.00  07/24/92     11966       $500.00          Lowbed                                Payable to Newark Body Shop
      08/05/92          $800.00  08/01/92      775        $800.00      Ana M. Flores              Rent
      08/05/92         $8,400.00 07/29/92     22682      $8,400.00  P.S.B. Trucking Inc.                          Payable to GM Investments
      08/25/92          $750.00  08/01/92     3656        $500.00         PJ Vierra          Rent Boscell Aug
                                 08/11/92     2220        $250.00 Charles and Rose Lamb     Rent 41550 Boscell
      09/08/92         $9,150.00 09/01/92     3671        $500.00         PJ Vierra          Rent Boscell Sep
                                 09/02/93     2245        $250.00 Charles and Rose Lamb
                                 09/01/92     22886      $8,400.00  P.S.B. Trucking Inc.                          Payable to GM Investments
      09/23/92          $300.00 09/17/92       162        $300.00      Ross Hamilton
      10/09/92         $9,400.00 10/05/92     23116      $8,400.00  P.S.B. Trucking Inc.                          Payable to GM Investments
                                                         $1,000.00        Unknown
      10/21/92          $550.00 10/13/92       2481         $50.00 Piazza Mobil Sweeping
                                 10/14/92      2479       $500.00 Piazza Mobil Sweeping           Rent
      11/05/92         $8,400.00                         $8,400.00        Unknown
      11/10/92          $750.00                           $750.00         Unknown
      12/07/92         $9,250.00                          $850.00         Unknown
                                 12/01/92     23543      $8,400.00  P.S.B. Trucking Inc.                          Payable to GM Investments
      12/31/92          $312.07 12/31/92                  $312.07   Interest for the Year
      TOTAL          $121,885.27                       $121,885.27
                                                                     - 79 -
APPENDIX “D”

  THE BANK OF MILPITAS ACCOUNT 512-001-102605 "ALVISO ROCK/HK RACING"
  DEPOSITS - 1990

                 Deposit     Check     Check    Check
  Deposit Date   Amount       Date     Number   Amount                     Payor                Check Memos                   Comments
   04/17/90        $500.00 04/14/90     1282      $500.00       Hillview Engineering Corp      #69 Advertising
   04/30/90       $2,493.59 04/27/90    522      $2,493.59             George Maciel          Closing of Account           from WF 384835
   05/07/90       $1,525.00 05/03/90    6202     $1,025.00            Alviso Rock Inc                               Payable to Alviso Rock/HK Racing
                            04/18/90    3707      $500.00    BBA, Inc. NASCAR Fund Trustee                             Payable to Howard Kaeding
    05/18/90      $2,055.00 05/17/90    4735      $855.00      George Maciel Trucking Inc.                          Payable to Alviso Rock/HK Racing
                            05/17/90    1493     $1,200.00           BAMA Equipment           Race #4,5,6,7,8 & 9
    06/19/90      $1,505.00 06/06/90    3822        $25.00    Northern Auto Racing Club Inc                            Payable to Howard Kaeding
                            06/18/90    6240      $545.00             Alviso Rock Inc                               Payable to Alviso Rock/HK Racing
                            06/14/90    4929      $335.00      George Maciel Trucking Inc.      Advertisement       Payable to Alviso Rock/HK Racing
                            06/19/90    1539      $600.00            BAMA Equipment                 #69             Payable to Alviso Rock/HK Racing
    07/10/90       $500.00 07/10/90      CM       $500.00           Deposit Correction         No Deposit Ticket
    07/10/90      $2,010.00 07/06/90    6247     $2,010.00            Alviso Rock Inc                               Payable to Alviso Rock/HK Racing
    07/26/90      $1,960.00 07/26/90              $750.00            BAMA Equipment                                 Payable to Alviso Rock/HK Racing
                            07/24/90   5166      $1,160.00     George Maciel Trucking Inc.                          Payable to Alviso Rock/HK Racing
                            07/05/90   19888        $50.00      Jack McCoy Enterprises                                 Payable to Howard Kaeding
    08/06/90       $210.00 07/15/90    4102       $210.00     Northern Auto Racing Club Inc                            Payable to Howard Kaeding
    08/15/90       $715.00 07/24/90    4163       $715.00     Northern Auto Racing Club Inc                            Payable to Howard Kaeding
    09/14/90      $1,000.00 09/14/90   1277       $300.00            George A. Maciel           Sprint Car #69             from acct 200593
                            09/06/90   1918       $700.00           High-Five Pizza Co.          Sponsorship        Payable to Alviso Rock/HK Racing
    09/25/90       $850.00 09/18/90    1681       $750.00            BAMA Equipment               Sponsor
                            09/07/90   2255         $50.00   BBA, Inc. NASCAR Fund Trustee                               Payable to Alviso Rock
                            09/13/90   2319         $50.00   BBA, Inc. NASCAR Fund Trustee                               Payable to Alviso Rock
    10/23/90       $975.00                        $500.00                Unknown                                             ABA 90-4176
                                                  $475.00                Unknown                                              ABA 11-35
    11/08/90        $30.00 11/08/90                 $30.00     Reversal of Service Charge
    11/23/90       $131.75 11/23/90               $131.75            George A. Maciel                                      from acct 300466
    12/27/90       $351.23 11/29/90    68619      $351.23     Awards & Achievement Bureau                              Payable to Howard Kaeding
    TOTAL        $16,811.57                     $16,811.57
                                                                          - 80 -

THE BANK OF MILPITAS ACCOUNT 512-001-102605 "ALVISO ROCK/HK RACING"
DEPOSITS - 1991

               Deposit     Check     Check     Check
Deposit Date   Amount       Date     Number    Amount                        Payor                       Check Memos                         Comments
 04/04/91          $12.00 04/04/91     CM          $12.00             Reject Charge Rev.
 04/04/91       $1,408.00 04/04/91    1430       $310.00               George A. Maciel                                                   from acct 200593
                          03/30/91    1602         $98.00                Robin Parden                    Terry NASCAR
                          03/21/91    2248      $1,000.00             High-Five Pizza Co.                 Sponsorship               Payable to Alviso Rock Racing
 04/10/91        $590.00                         $590.00                    Currency                                                 10x$50 3x$20 2x$10 10x$1
 04/30/91        $245.00                         $245.00                    Currency
 05/28/91          $12.00 05/28/91     CM          $12.00             Reject Charge Rev.
 05/29/91       $1,500.00              CM       $1,500.00               Phone Transfer                                                    from acct 300466
 06/11/91       $1,310.00                       $1,310.00                   Unknown                                                          ABA 11-35
 07/02/91       $1,560.00                       $1,560.00                   Unknown
 07/09/91       $1,060.00                       $1,060.00                   Currency
 08/05/91        $600.00                         $600.00                    Unknown
 08/13/91        $500.00 08/13/91     1056       $500.00                GM Investments                        Sprint                       from acct 3171
 08/21/91       $1,600.00                       $1,600.00                   Unknown
 09/09/91       $2,000.00 09/07/91     163      $2,000.00              George A. Maciel
 09/24/91        $360.00 09/11/91     15150      $360.00         California Racing Association
 11/06/91          $90.00 10/15/91    6514         $90.00       Northern California Racing Club                                  Payable to George Maciel/Alviso Rock
 12/16/91       $1,550.00 12/11/91    2195       $550.00            Piazza Mobil Sweeping
                          12/07/91     634       $700.00            Ricky or Ana M. Flores                 Dec Rent
                          12/12/91    1192       $300.00                 Gradetech Inc                 Headlights for #203
  TOTAL        $14,397.00                      $14,397.00




THE BANK OF MILPITAS ACCOUNT 512-001-102605 "ALVISO ROCK/HK RACING"
DEPOSITS - 1992

               Deposit    Check      Check    Check
Deposit Date   Amount      Date      Number   Amount                 Payor                    Check Memos                         Comments                   Less Cash
 02/12/92      $3,500.00 02/10/92     1077    $3,500.00          GM Investments            Advertising Sprint Car             from acct 303171
 04/07/92      $7,700.00 04/03/92     3465     $200.00      West Coast Aggregates Inc.                                 Payable to Alviso Rock/HK Racing
                                                                         - 81 -

THE BANK OF MILPITAS ACCOUNT 512-001-102605 "ALVISO ROCK/HK RACING"
DEPOSITS - 1992

               Deposit   Check      Check    Check
Deposit Date   Amount     Date      Number   Amount                   Payor                  Check Memos                       Comments                   Less Cash
                        04/07/92     184     $7,500.00          George A. Maciel                                           from acct 300466
  04/24/92      $950.00 04/16/92     8946      $450.00     San Jose Commercial Tire                                 Payable to Alviso Rock/HK Racing
                        04/01/92     3563      $500.00               PJ Vierra            Rent on Boscell April
  05/07/92      $740.00 05/07/92               $900.00           Alviso Rock Inc.           IH 9370 Hood
                                              $(160.00)             Less Cash                                                                              $(160.00)
  05/15/92      $621.00 12/31/91     1895      $410.00               Cars Inc.                                         Payable to Howard Kaeding
                        05/09/92     4930        $36.00         Mary Sue Schriver
                                               $175.00               Currency
  06/04/92      $530.00 05/21/92     2207      $210.00               Cars Inc.                                            Payable to Alviso Rock
                        05/18/92     7159      $100.00    Northern Auto Racing Club Inc                            Payable to George Maciel/Alviso Rock
                                               $220.00               Currency
  06/12/92      $861.00 06/05/92     9440      $600.00     San Jose Commercial Tire                                       Payable to HK Racing
                        06/08/92     7346      $100.00    Northern Auto Racing Club Inc                            Payable to George Maciel/Alviso Rock
                                               $161.00               Currency
  07/06/92      $814.00 06/08/92     3652      $200.00     West Coast Aggregates Inc.                                Payable: Alviso Rock/HK Racing
                         06/25/92    397       $614.00     San Jose Equipment Sales          #291 Repairs         Payable: Newark Truck & Body/Bounced
  07/23/92      $350.00 07/13/92     7590      $150.00    Northern Auto Racing Club Inc                            Payable to George Maciel/Alviso Rock
                         07/08/92    3757      $200.00     West Coast Aggregates Inc.                              Payable to George Maciel/Alviso Rock
  08/04/92      $820.00 07/29/92     2422      $820.00               Cars Inc.                                            Payable to Alviso Rock
  08/25/92     $1,415.00 07/31/92    1600      $200.00            Louis Bewley                  Rent
                         07/24/92    1599      $200.00            Louis Bewley                   Rent
                         08/14/92    1607      $200.00            Louis Bewley                   Rent
                         08/07/92    3508      $500.00            Linda Ventura                Aug. Rent
                         08/25/92              $315.00               Currency
  09/08/92     $1,550.00 09/02/92   1069     $1,350.00     San Jose Commercial Tire         June, July, Aug         Payable to Alviso Rock/HK Racing
                         08/28/92   1618       $200.00            Louis Bewley                   Rent
  09/23/92      $200.00 09/18/92    1632       $200.00            Louis Bewley                   Rent
  10/09/92      $325.00 09/19/92    23995        $75.00      Silver Dollar Speedway            E Main
                         09/19/92   23929        $50.00      Silver Dollar Speedway            F Main
                         09/17/92   3947       $200.00     West Coast Aggregates Inc.                               Payable to Alviso Rock/HK Racing
  11/05/92     $2,517.96 10/30/92   7311     $2,517.96     George Maciel Trucking Inc
                                                                    - 82 -

THE BANK OF MILPITAS ACCOUNT 512-001-102605 "ALVISO ROCK/HK RACING"
DEPOSITS - 1992

               Deposit    Check     Check    Check
Deposit Date   Amount      Date     Number   Amount             Payor          Check Memos        Comments            Less Cash
 11/10/92      $5,000.00 11/10/92     CM     $5,000.00         Transfer                       from acct 1300466
 12/07/92       $100.00 11/30/92     2992     $100.00          Cars Inc.                     Payable to Alviso Rock
 12/23/92      $3,500.00 12/23/92     CM     $3,500.00    Telephone Transfer                  from acct 1300466
  TOTAL        $31,493.96                    $31,493.96                                                                $(160.00)
                                                                        - 83 -
APPENDIX “E”

  WELLS FARGO BANK ACCOUNT 0108-363904 "GEORGE MACIEL/PETE VIVIANO"
  DEPOSITS - 1990

   Deposit     Deposit     Check     Check
     Date      Amount       Date     Number   Check Amount                  Payor                    Check Memos                    Comments
   01/05/90      $750.00 12/30/89     3047          $500.00           P.J. Vierra & Sons              1/1 to 2/1/90           Payable: M&V Investment
                          01/02/90    3765          $250.00            Charles A. Lamb                    Rent
   01/08/90     $8,500.00 12/06/89    1102        $8,500.00           George A. Maciel                   Boscell                   from BM 0593
   01/24/90     $2,150.00 01/24/90    1117        $2,150.00           George A. Maciel                                             from BM 0593
   01/25/90     $4,825.00 01/25/90    5662        $4,825.00    Tri City Truck Parts and Equip      Isit Cashier's Check           Payable to Cash
   02/01/90      $500.00 01/29/90     3066          $500.00           P.J. Vierra & Sons            Rent 2-1 to 3-1-90        Payable: M&V Investment
   02/06/90     $8,400.00 02/02/90    17371       $8,400.00         P.S.B. Trucking Inc.                 2/90 Rent
   02/14/90     $2,600.00 02/14/90     104        $2,600.00           George A. Maciel               Cashier's Check                from BM 0466
   02/26/90     $3,528.00 02/22/90    11522       $1,764.00            Viviano Trucking                                       Payable: Wells Fargo Bank
                          02/20/90    1129        $1,764.00           George A. Maciel              For Lease Boscell               from BM 0593
   03/08/90     $8,900.00 02/28/90    3084          $500.00           P.J. Vierra & Sons                  Rent                Payable: M&V Investment
                          03/07/90    1143        $8,400.00           George A. Maciel                   Bryant                   from BM 200593
   03/16/90      $250.00 02/01/90     1002          $250.00            Charles A. Lamb                    Rent
   04/05/90     $8,650.00 04/03/90    1094          $250.00            Charles A. Lamb                    Rent
                          04/02/90    17726       $8,400.00         P.S.B. Trucking Inc.
   04/17/90      $500.00 04/09/90     3112          $500.00           P.J. Vierra & Sons        Rent for 4-1 to 5-1 Boscell
   04/17/90    $15,954.84 04/16/90    11740       $3,500.00            Viviano Trucking           Boscell Prop Taxes              Payable to Cash
                          04/17/90     171       $12,454.84           George A. Maciel           Boscell 88/89 Sup Ass            from BM 300466
   04/19/90        $30.00 04/19/90                   $30.00   Reimbursement of Overdraft Chg
   05/02/90     $8,400.00 05/01/90   17903        $8,400.00         P.S.B. Trucking Inc.
   05/03/90     $1,888.20 05/03/90   5844         $1,888.20    Tri City Truck Parts and Equip             AFCO                    Payable to Cash
   05/04/90      $500.00 05/02/90    3127           $500.00           P.J. Vierra & Sons         Rent for May on Boscell      Payable: M&V Investment
   06/29/90         $7.50 06/29/90                    $7.50    Reimbursement of Service Chg
   06/29/90        $15.00 06/29/90                   $15.00    Reimbursement of Service Chg
   07/05/90      $100.00 07/05/90                   $100.00                Currency
   07/06/90        $15.00 07/06/90                   $15.00    Reimbursement of Service Chg
    TOTAL      $76,463.54                        $76,463.54
                                                                   - 84 -

APPENDIX “F”

  1990 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                   Deposit   Check    Check
      Bank Acct      Date     Date   Number Check Amount                    Payor                  Check Memos                 Comments
      BM300466     01/03/90 12/29/89  1298      $10,000.00           BAMA Equipment               Shareholder Draw
      BM300466     01/03/90 12/22/89  5551       $1,024.15             Alviso Rock Inc
      BM300466     01/03/90 12/27/89   247       $9,757.00    Atherton & Stevens Trust Acct       Arbitration Award
      BM300466     01/03/90 12/27/89  3895       $1,000.00        George Maciel Trucking       Reimburse for DMV Fees
      WF363904     01/08/90 12/06/89  1102       $8,500.00           George A. Maciel                   Boscell              from BM 0593
      WF363904     01/24/90 01/24/90  1117       $2,150.00           George A. Maciel                                        from BM 0593
      WF363904     01/25/90 01/25/90  5662       $4,825.00    Tri City Truck Parts and Equip     Isit Cashier's Check       Payable to Cash
      BM200593     02/14/90 02/06/90 9014592     $4,500.00               Taco Bravo                                         Cashiers Check
      WF363904     02/14/90 02/14/90   104       $2,600.00           George A. Maciel             Cashier's Check            from BM 0466
      BM300466     02/14/90 08/25/89  3259       $4,447.40        George Maciel Trucking                                    Payable: Fred Isit
      WF363904     02/26/90 02/20/90  1129       $1,764.00           George A. Maciel             For Lease Boscell          from BM 0593
      WF363904     02/26/90 02/22/90  11522      $1,764.00            Viviano Trucking                                  Payable: Wells Fargo Bank
      BM200593     03/08/90 03/06/90 8122797     $1,936.02        California Land Title Co.      Escrow 284613-LM
      WF363904     03/08/90 03/07/90  1143       $8,400.00           George A. Maciel                 Bryant                from BM 200593
      BM200593     03/16/90 03/14/90  1370       $1,000.00           BAMA Equipment
      BM200593     03/16/90           83508          $2.00          Revlon Beauty Care
      BM300466     03/20/90 03/20/90   CM      $100,000.00      Time Certificate of Deposit
      BM200593     04/04/90 04/03/90  1412       $1,000.00           BAMA Equipment
      BM200593     04/17/90 04/05/90 8123340      $873.88         California Land Title Co.      Escrow 287641-LM
      WF363904     04/17/90 04/16/90  11740      $3,500.00            Viviano Trucking           Boscell Prop Taxes         Payable to Cash
      WF363904     04/17/90 04/17/90   171      $12,454.84           George A. Maciel           Boscell 88/89 Sup Ass       from BM 300466
      WF363904     04/19/90 04/19/90                $30.00   Reimbursement of Overdraft Chg
      BM102605     04/30/90 04/27/90   522       $2,493.59             George Maciel             Closing of Account         from WF 384835
      BM200593     04/30/90 04/19/90  22834       $109.39    Saratoga Savings & Loan Assoc
      BM200593     04/30/90 04/20/90 8123737        $44.42        California Land Title Co.      Escrow 284613-LM
      WF363904     05/03/90 05/03/90  5844       $1,888.20    Tri City Truck Parts and Equip          AFCO                  Payable to Cash
      BM300466     05/09/90 05/03/90  1461       $1,000.00           BAMA Equipment
      BM102605     05/18/90 05/17/90  1493       $1,200.00           BAMA Equipment              Race #4,5,6,7,8 & 9
      BM300466     05/24/90 05/18/90  3145      $14,017.00              US Treasury
      BM300466     06/11/90 04/27/90   179      $25,000.00              Cashier's Ck
      BM300466     06/11/90 05/16/90   249      $47,495.18              Cashier's Ck
      WF363904     06/29/90 06/29/90                 $7.50    Reimbursement of Service Chg
                                                                  - 85 -

1990 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                 Deposit   Check   Check
    Bank Acct      Date     Date   Number Check Amount                   Payor                  Check Memos                   Comments
    WF363904     06/29/90 06/29/90                $15.00     Reimbursement of Service Chg
    WF363904     07/06/90 07/06/90                $15.00     Reimbursement of Service Chg
    BM300466     07/10/90 07/03/90  1585       $1,000.00            BAMA Equipment
    BM200593     08/15/90 08/13/90  1641       $1,000.00            BAMA Equipment
    BM102605     09/14/90 09/14/90  1277        $300.00             George A. Maciel            Sprint Car #69             from acct 200593
    BM200593     09/14/90 09/05/90  1124       $2,000.00             Merced Rosales
    BM300466     09/14/90 09/05/90  3981        $652.51             Daniel Hernandez                 Sept
    BM300466     10/12/90 10/12/90   CM       $40,000.00                Unknown
    BM200593     10/17/90 10/04/90  4000        $653.00          Daniel Hernandez Jr.
    BM300466     10/23/90                      $1,200.00                Unknown                                                ABA 11-35
    BM300466     11/01/90 10/20/90  1527       $1,200.00       Hillview Engineering Corp                              "Insuff Funds" - ck bounced
    BM102605     11/08/90 11/08/90                $30.00      Reversal of Service Charge
    BM300466     11/14/90 11/07/90  4065        $653.00             Daniel Hernandez
    BM300466     11/14/90 11/09/90  1760       $1,000.00            BAMA Equipment
    BM300466     11/23/90 11/21/90  566        $3,000.00             Lavrar Trucking                                             Loan
    BM102605     11/23/90 11/23/90              $131.75             George A. Maciel                                       from acct 300466
    BM200593     12/13/90 11/30/90  4075        $653.00          Daniel Hernandez Jr.
                             1990
                            TOTAL              $328,286.83




1991 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                 Deposit   Check   Check
  Bank Account     Date     Date   Number  Check Amount                  Payor                  Check Memos                   Comments
    BM300466     01/17/91 01/05/91  4116          $653.00        Daniel Hernandez Jr.
    BM200593     02/20/91 02/06/91  4130          $653.00        Daniel Hernandez, Jr.
    BM300466     02/25/91 02/25/91  1842        $1,000.00         BAMA Equipment                October 1990
                                                                                            Reimburse Reliance End
   BM300466      02/25/91   02/25/91   1841     $11,300.00        BAMA Equipment                    Dump
   BM200593      03/13/91   03/11/91   4136       $653.00        Daniel Hernandez, Jr.
   BM300466      03/28/91   03/25/91             $6,250.00       Marcelo Rodriguez Jr.
   BM200593      03/28/91                        $1,000.00             Unknown                                       Math Error? 3/28 DM of $1,000
   BM102605      04/04/91   04/04/91   1430       $310.00          George A. Maciel                                        from acct 200593
   BM102605      04/04/91   04/04/91    CM          $12.00        Reject Charge Rev.
                                                                  - 86 -

1991 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                 Deposit   Check   Check
  Bank Account     Date     Date   Number  Check Amount                   Payor                  Check Memos                      Comments
    BM300466     04/22/91 04/22/91   CM         $4,000.00     Reversal of 4/19/91 Transfer
    BM200593     04/26/91 04/05/91   306          $200.00           Merced Rosales
    BM200593     04/26/91 04/10/91  4160          $653.00        Daniel Hernandez, Jr.
    BM300466     05/09/91 04/09/91  40697       $3,721.86     Adriatic Insurance Company          Collision Final                  Redeposit
    BM200593     05/21/91 05/15/91  33460         $122.95      Stewart Title of California
    BM102605     05/28/91 05/28/91   CM            $12.00         Reject Charge Rev.
    BM102605     05/29/91            CM         $1,500.00            Phone Transfer                                            from acct 300466
    BM200593     06/13/91 06/10/91  4202          $653.00    Daniel & Cecelia Hernandez Jr.
    BM200593     07/09/91 07/01/91  4207          $653.00    Daniel & Cecelia Hernandez Jr.
    BM300466     07/18/91 07/12/91   126          $100.00            Collette M. Krull                Loan
    BM200593     08/05/91                       $1,000.00                Unknown                                          Returned ck 8/9 DM $1,000
    BM102605     08/13/91 08/13/91  1056          $500.00           GM Investments                    Sprint                    from acct 3171
    BM303171     09/06/91 09/06/91   DM            $12.00       Reversal of Ck Charge
    BM102605     09/09/91 09/07/91   163        $2,000.00           George A. Maciel
    BM300466     09/24/91 09/02/91  4033          $653.00        Daniel Hernandez Jr.
    BM300466     09/24/91 09/13/91             $11,613.00       United States Treasury            Tax Refund
    BM300466     09/24/91 09/23/91  1416        $1,000.00           Daniel Parquette            Aug & Sept Rent           May have bounced - 10/1 DM
                                                                                                                       "Insuff Funds" - debit memo in acct
   BM200593      10/08/91   09/23/91    1416     $1,000.00           Daniel Parquette           Aug & Sept Rent                       0466
   BM303171      10/16/91   10/10/91    4005      $653.00           Daniel Hernandez                OOPS
   BM303171      10/16/91   10/11/91    1428     $1,500.00           Daniel Parquette                                           check bounced
   BM200593      11/22/91              168907     $150.00    Electric & Gas Industries Asso    Refrigerator Rebate
   BM300466      12/30/91   12/14/91    4306      $653.00         Daniel Hernandez Jr.
   BM300466      12/30/91   12/30/91     CM     $20,000.00        Telephonic Transfer                                            From BM 0593
                            1991
                            TOTAL               $74,180.81




1992 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                 Deposit   Check   Check
  Bank Account     Date     Date   Number  Check Amount                  Payor                   Check Memos                      Comments
    BM300466     01/23/92 01/11/92  4338          $653.00          Daniel Hernandez
    BM300466     02/06/92 02/07/92  685           $700.00         Ricky or Ana Flores                                        Bounced - 2/14/92 DM
    BM102605     02/12/92 02/10/92  1077        $3,500.00          GM Investments             Advertising Sprint Car           from acct 303171
                                                                       - 87 -

1992 DEPOSITS RESULTING FROM NON-TAXABLE ITEMS
                 Deposit   Check   Check
  Bank Account     Date     Date   Number  Check Amount                      Payor                       Check Memos                 Comments
    BM200593     02/12/92 02/10/92  4359          $653.00             Daniel Hernandez Jr.
    BM303171     02/12/92 02/10/92  180         $3,500.00              George A. Maciel                                           from acct 300466
    BM200593     02/26/92 02/25/92  216           $500.00                 Collette Krull
    BM300466     03/03/92 03/03/92   CM       $100,000.00        Balance from COD #001291269
    BM300466     03/04/92 03/02/92  4373          $653.00              Daniel Hernandez
                                                                                                     "Not used for intended
   BM300466      03/04/92   03/03/92    5437      $136,945.68 Cashier's Ck to Santa Clara Title Co         purpose"
                                                                                                       Residence Service
   BM200593      04/01/92   03/11/92   61741206      $369.44                  AT&T                          Refund                   BM200593
   BM102605      04/07/92   04/07/92     184        $7,500.00           George A. Maciel                                          from acct 300466
   BM200593      04/16/92   04/10/92     4395        $653.00          Daniel Hernandez Jr.
   BM200593      04/21/92   04/21/92      CM        $4,000.00           Dad's Enterprises                   Transfer
   BM200593      05/15/92   05/10/92     4417        $653.00          Daniel Hernandez Jr.
   BM300466      05/15/92   03/20/92   8140454      $7,657.22       California Land Title Co.        Escrow No. 331486-LM
   BM300466      06/03/92   06/03/92      CM      $100,000.00      Balance from #01-201318
   BM303171      06/12/92   06/06/92     4433        $653.00      Daniel and Cecelia Hernandez
                                                                                                                               Payable: Newark Truck &
   BM102605      07/06/92   06/25/92    397          $614.00        San Jose Equipment Sales             #291 Repairs              Body/Bounced
   BM300466      07/23/92   07/10/92    4466         $653.00            Daniel Hernandez
   BM300466      08/25/92   08/10/92    4493         $653.00            Daniel Hernandez
   BM300466      09/08/92   09/08/92     DM             $0.17          Deposit Correction
   BM300466      09/23/92   09/11/92               $16,895.00        United States Treasury                Tax Refund
                                                                                                     That's All Folks! Thank
   BM300466      09/23/92   09/12/92    4534         $653.00             Daniel Hernandez                      You
   BM300466      10/21/92   10/13/92    1135       $10,381.17     First American Title Insurance     Escrow No. 208810AM
   BM102605      11/10/92   11/10/92     CM         $5,000.00                Transfer                                            from acct 1300466
   BM200593      12/07/92   12/05/92    879          $700.00                Ana Flores                                         Bounced - 12/15/92 DM
   BM102605      12/23/92   12/23/92     CM         $3,500.00           Telephone Transfer                                       from acct 1300466
                            1992
                            TOTAL                 $407,639.68
