United States Tax Court

T.C. Memo. 2024-1

JESSE ALVARADO AND ESTATE OF MARIA DE LOURDES 

VELASQUEZ, DECEASED, JESSE ALVARADO, SPECIAL 

ADMINISTRATOR,

Petitioners

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket No. 15059-18. Filed January 3, 2024.

__________

Jesse Alvarado and Estate of Maria de Lourdes Velasquez, Deceased,

Jesse Alvarado, Special Administrator, pro sese.

Paulmikell A. Fabian and Sarah A. Herson, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COPELAND, Judge: The Commissioner of Internal Revenue 

(Commissioner) determined that Petitioners, Jesse Alvarado and Maria 

de Lourdes Velasquez, have federal income tax deficiencies of $892,461 

and $746,337 for 2011 and 2012 (years in issue), respectively.1 These 

deficiencies stem primarily from alleged unreported gross receipts and 

overstated costs of goods sold at Mr. Alvarado’s used car sales business. 

The Commissioner further determined late-filing additions to tax under 

section 6651(a)(1)2 of $222,014 and $186,514 for 2011 and 2012, 

1 Ms. Velasquez passed away in August 2021 after this case went to trial. 

Because all the relevant events occurred while she was alive, we continue to refer to 

Mr. Alvarado and Ms. Velasquez together as “Petitioners.”

2 Unless otherwise indicated, statutory references are to the Internal Revenue 

Code, Title 26 U.S.C. (I.R.C. or Code), in effect at all relevant times, regulation 

Served 01/03/24
2

[*2] respectively. For Mr. Alvarado only, the Commissioner determined

civil fraud penalties under section 6663 of $669,346 and $559,753 for 

2011 and 2012, respectively. In the event that the fraud penalties for 

Mr. Alvarado are not upheld for either or both years in issue, the 

Commissioner has determined as an alternative accuracy-related 

penalties. See I.R.C. § 6662(a). The Commissioner conveyed his 

deficiency and penalty determinations in two separate notices of 

deficiency, one with a salutation addressing only Mr. Alvarado and one 

with a salutation addressing only Ms. Velasquez.3 Both notices were 

dated April 27, 2018.

After concessions by the parties (detailed below),4 the issues for 

decision are as follows:

1. Whether Petitioners had unreported gross receipts of 

$1,223,387 and $24,294 for 2011 and 2012, respectively;

2. Whether Petitioners overreported costs of goods sold by 

$514,583 and $1,200,242 for 2011 and 2012, respectively;

3. Whether Petitioners overreported various expenses on 

Schedules C, Profit or Loss from Business (Sole 

Proprietorship), in the aggregate amounts of $37,052 and 

$103,705 for 2011 and 2012, respectively;

4. Whether Petitioners are liable for the section 6651(a)(1) 

late-filing additions to tax for one or both of the years in 

issue; and

references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all 

relevant times, and Rule references are to the Tax Court Rules of Practice and 

Procedure. Some dollar amounts are rounded.

3 While it is clear from the context of the notice of deficiency containing the 

civil fraud penalties and alternative accuracy-related penalties that it was intended 

only for Mr. Alvarado, his notice was sent by certified mail to “Jesse Alvarado and 

Maria de Lourdes Velasquez a.k.a. Marylou Velasquez” and contained a continuation 

sheet and worksheets titled in both Petitioners’ names. Similarly, the notice of 

deficiency intended only for Ms. Velasquez, which determined late-filing additions to 

tax but no penalties, was sent by certified mail to “Jesse Alvarado & Maria de Lourdes 

Velasquez a.k.a. Marylou Velasquez” with worksheets titled in both their names.

4 Before trial the parties agreed that Ms. Velasquez qualifies under section 

6015(b) for “innocent spouse” relief from joint and several liability for the tax 

deficiencies at issue and the section 6651(a)(1) additions to tax.
3

5. Whether Mr. Alvarado is liable for the section 6663 civil 

fraud penalties or, alternatively, the section 6662 accuracyrelated penalties for one or both of the years in issue.

FINDINGS OF FACT

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

reference we incorporate the parties’ First Stipulation of Facts and the 

accompanying Supplements and Exhibits. Mr. Alvarado and Ms. 

Velasquez resided in California when they timely filed their Petition.

I. South Bay Autos and Alvarado Tax Service

Mr. Alvarado worked as a commercial lender at Comerica Bank 

for approximately 25 years before opening a used car sales business, 

South Bay Autos (South Bay), which he operated as a sole proprietorship 

from 2008 to 2014. Mr. Alvarado rented premises in Hawthorne, 

California, to sell used cars and (as a side business) to prepare tax 

returns. He held a preparer tax identification number (PTIN) from the 

Internal Revenue Service (IRS) from 2009 through at least 2012, and he 

prepared several dozen tax returns during the years in issue under the 

business name Alvarado Tax Service. His tax return clients were 

primarily South Bay customers, whom he charged in the range of $60–

$200 for the additional service.

Mr. Alvarado’s business model at South Bay relied heavily on 

credit, both for his own inventory purchases and for his customers’. Mr. 

Alvarado bought much of his inventory at used car auctions using loan 

proceeds from Dealer Services Corp. (DSC). DSC merged with another 

company sometime in 2013 to form NextGear Capital (NextGear). Mr. 

Alvarado would need to pay back these purchase loans within 45 days 

or otherwise face high interest charges from DSC (and, later, NextGear).

Mr. Alvarado therefore wanted to sell his inventory quickly; yet 

his potential customers from the Hawthorne area often had limited 

income. To address this problem, Mr. Alvarado contracted with Topaz 

Financial Services (Topaz), and later with Premier Auto Credit 

(Premier), to provide credit to his customers. In a typical sale, Mr. 

Alvarado and the customer would sign a sales contract, with the 

customer making a small downpayment; then Mr. Alvarado would 

assign the contract to Topaz (or later to Premier) in exchange for 

advance payment as further detailed below. The customer would make 

all subsequent payments directly to the financer.

[*3]
4

[*4] For his part, Mr. Alvarado took the used car sale contracts 

periodically (and typically in batches) to the financers, who would pay 

him the face value of the contracts less (1) a reserve amount, which Mr. 

Alvarado would receive only once the customer fully paid the loan 

balance, and (2) the outstanding value of any previous contracts that 

had become uncollectible in the meantime. The financers deducted the 

latter amount pursuant to Mr. Alvarado’s agreement to fully guarantee 

each customer’s loan. This business model eventually became 

financially unsustainable, and Mr. Alvarado closed South Bay in or 

around 2014, after drawing on his pensions and personal savings.

II. Tax Returns

Mr. Alvarado prepared and filed his and Ms. Velasquez’s joint 

federal income tax returns for tax years 2009 through 2012, all of which 

were filed late. The 2011 return was due on April 17, 2012, but was not 

filed until February 4, 2013. The 2012 return was due on April 15, 2013, 

but was not filed until June 27, 2014. Mr. Alvarado and Ms. Velasquez 

neither filed for nor received an extension of time to file their returns for 

either of the years in issue.

The 2011 and 2012 joint returns did not separately identify 

income from Alvarado Tax Service, although such income was minimal. 

Those returns likewise did not report the income Petitioners earned 

from subleasing real estate for a few months in 2012. Other than these 

small amounts, Petitioners’ only taxable income (and the only income 

reported on their returns) came from South Bay used car sales.

Mr. Alvarado attached Schedules C to the 2011 and 2012 joint 

returns, reporting various categories of income and expenses for South 

Bay, along with calculations of costs of goods sold. On both Schedules C, 

all original entries (excluding the results of arithmetic operations on 

some entries) end in “0” or “5.” The 2011 Schedule C reported net profit 

of $13,900, while the 2012 Schedule C reported net profit of $30,035. 

After application of personal deductions, personal exemptions, the 

earned income tax credit, and/or the child tax credit (but no withholding 

or estimated tax payments), Petitioners claimed a refund due of $4,405 

for 2011 and $281 for 2012.

III. IRS Examination

Petitioners’ 2011 joint income tax return was selected by the IRS 

for audit in or around 2014. Marianna Kaplan (RA Kaplan), the IRS 
5

[*5] revenue agent who primarily conducted the 2011 examination, was 

subsequently assigned to audit Petitioners’ 2012 joint return as well.

Petitioners failed to reply to RA Kaplan’s initial letter requesting 

a meeting. After RA Kaplan sent a followup letter demanding a meeting 

on a particular date as well as production of relevant documents, 

Petitioners (or their representative at the time) called to reschedule the 

meeting twice. When RA Kaplan finally met Mr. Alvarado at South 

Bay’s business premises, he did not have any of the requested 

documents available for her. He kept no books or records for the 

business other than “car jackets,” which RA Kaplan examined at a 

subsequent visit. Each car jacket was a folder containing dozens of 

documents relating to Mr. Alvarado’s sale of a particular car, such as 

copies of the sale contract and financing agreement; some also contained 

evidence of his original inventory purchase. Mr. Alvarado kept the car 

jackets in boxes, roughly separated by year of purchase but not 

otherwise organized. Each jacket indicated the car’s date of sale to a 

customer and its vehicle identification number (VIN), a unique 17-

character identifier assigned to any on-road vehicle sold in the United 

States. RA Kaplan found 265 car jackets for cars sold in 2011 and 300 

for 2012.

Mr. Alvarado represented to RA Kaplan that he used the car 

jackets to compute his income as reported on Petitioners’ tax returns. 

RA Kaplan accordingly used the car jackets to sum the purchase prices 

of cars sold by South Bay during the years in issue. Using this method, 

RA Kaplan calculated gross sales of $2,764,693 in 2011 and $2,765,744 

in 2012. These amounts exceeded the gross receipts reported on 

Petitioners’ returns: $1,815,410 for 2011 and $2,538,525 for 2012.

Since many of the car jackets also contained invoices for South 

Bay’s original purchases of the cars, and since Mr. Alvarado provided no 

other documents or records relating to his purchases, RA Kaplan also 

tallied the invoices. However, she excluded all invoices with purchase 

dates before 2011 because Mr. Alvarado kept no inventory records, and 

she could not determine whether he had already deducted the cost of 

these pre-2011 cars for the years he bought them. RA Kaplan’s review 

of the invoices yielded costs of goods sold calculations of $156,165 for 

2011 and $434,930 for 2012. These amounts were considerably lower 

than those reported on Petitioners’ returns: $1,515,510 for 2011 and 

$2,146,780 for 2012.
6

[*6] To investigate these discrepancies, RA Kaplan summoned 

complete deposit and expenditure records (including images of canceled 

checks) for Mr. Alvarado’s accounts with Comerica Bank and Bank of 

America during the years in issue. RA Kaplan tallied these deposits and 

debits, excluding deposits that appeared to be nontaxable (such as 

refunds) and excluding debits that appeared to be nondeductible (such 

as restaurant meals and clothing purchases). RA Kaplan also excluded 

debits that appeared to be for car inventory purchases unless the VIN 

matched that of a car which, according to the car jackets, was sold in 

2011 or 2012. RA Kaplan conducted this bank accounts analysis without 

help or input from Petitioners, as they had stopped cooperating and 

refused to meet with her except when officially summoned.

After some adjustments made during Petitioners’ internal appeal 

with the IRS and in this litigation (as described below), the updated 

bank accounts analysis yielded taxable deposits of $3,038,797 in 2011 

and $2,562,819 in 2012 and costs of goods sold of $1,000,927 in 2011 and 

$946,538 in 2012. As explained above, these calculations of costs of 

goods sold do not include any amount for cars that South Bay sold in 

either year in issue but for which Mr. Alvarado could not substantiate a 

purchase with a matching VIN.

IV. IRS Appeals and Pretrial Discovery

During Petitioners’ internal appeal with the IRS, Mr. Alvarado 

continued his pattern of canceling meetings and providing requested 

documents late or incompletely if at all. However, he did produce 

several documents of potential relevance to redetermining Petitioners’ 

income. First, he submitted dealer statements from NextGear and 

buyer receipts from AutoNation Auto Auction and South Bay Auto 

Auction5 (together, auto auctions). The NextGear statements list by 

VIN all cars that South Bay purchased during the years in issue using 

loans from NextGear. The buyer receipts list by VIN some of the cars 

South Bay purchased from the auto auctions during the years in issue. 

RA Kaplan crosschecked the VINs from these statements and buyer 

receipts with the VINs appearing in the 2011 and 2012 car jackets. 

When she found a match for a car whose car jacket did not include a 

purchase invoice, she added the purchase price from the statements or 

receipts to her calculation of cost of goods sold.

5 South Bay Auto Auctions is not related to Mr. Alvarado’s South Bay business.
7

[*7] Additionally, before trial Mr. Alvarado came forward with 8 

canceled checks from 2011 and 22 from 2012, each written by South Bay 

to an auction house for a car included in the car jackets but not 

previously included in RA Kaplan’s calculations of costs of goods sold. 

The Commissioner added the amounts of these checks to RA Kaplan’s

totals, yielding costs of goods sold of $1,000,927 for 2011 and $946,538 

for 2012.

During the internal IRS appeal, Mr. Alvarado also submitted 

several hundred pages of printouts from his account with DealerCenter, 

an inventory management system for car dealers. The printouts contain 

information on several hundred cars South Bay purchased during the 

years in issue, including VIN, purchase price, original purchase date 

(that is, the date on which South Bay acquired the car), and the “asking 

price” for sale to customers. However, there is no indication in these 

records of when, if ever, the cars were sold to customers nor whether the 

“asking price” matched the eventual sale price. Mr. Alvarado and his 

employees created these records contemporaneously with inventory 

purchases in the years in issue.

Some of the cars listed in the DealerCenter records have VINs 

matching those in the car jackets that Mr. Alvarado supplied to RA 

Kaplan during the examination. At trial Mr. Alvarado submitted 

supplemented versions of RA Kaplan’s spreadsheets, in which he added 

purchase prices for cars whose VINs appeared in both the car jackets 

and the DealerCenter records but whose purchase prices RA Kaplan had 

not previously recorded. The Commissioner refused to recognize these 

additional claimed inventory purchases, on grounds of suspicion about 

the authenticity of the DealerCenter printouts.

Before trial Mr. Alvarado also produced quarterly summary 

reports for the years in issue prepared contemporaneously by Topaz for 

South Bay. Each quarterly report contains (1) a listing of the car 

contracts (by selling date and dollar amount) that South Bay sold to 

Topaz during that quarter, (2) a listing of the payments that Topaz 

actually made to South Bay during the quarter, (3) a listing of all 

outstanding loans (by borrower name, VIN, and outstanding loan 

balance) originated by South Bay but which Topaz deemed uncollectible 

during that quarter, and (4) a listing of all beginning and outstanding 

loan balances (by loan date, car model and year, borrower name, and 

beginning and outstanding loan balances). The reports show a total of 

291 car purchases that Topaz financed for South Bay customers in 2011 

and 160 purchases financed in 2012.
8

[*8] RA Kaplan’s bank accounts analysis included canceled checks 

that South Bay wrote to Topaz totaling $111,006 in 2011 and $80,519 in 

2012. The Commissioner made no adjustments to either gross receipts 

or cost of goods sold on account of the Topaz reports or the canceled 

checks.

Finally, before trial Mr. Alvarado produced transaction 

summaries prepared by Premier for approximately 80 car loans that 

Premier purchased from South Bay between June and December 2012. 

Each summary lists (among other things) the original loan balance, the 

amount paid to South Bay (as reduced by various offsets, including a 

reserve withheld—at least initially—by Premier), the date of payment 

to South Bay, borrower name, car model and year, and VIN. Again, the 

Commissioner made no adjustments to RA Kaplan’s bank accounts 

analysis on account of the Premier transaction summaries.

V. Final Deficiency Determinations

After the agreed adjustments made during the internal IRS 

appeal and the discovery period of litigation, RA Kaplan revised her 

bank accounts analysis to yield the following calculations of Schedule C 

gross income, which the Commissioner asks us to uphold:
9

2011 2012

Form 1040, 

Schedule C

Determined 

by the IRS

Form 1040, 

Schedule C

Determined 

by the IRS

Gross Receipts $1,815,410 $3,038,797 $2,538,525 $2,562,819

Cost of Goods 

Sold (1,515,510) (1,000,927) (2,146,780) (946,538)

Advertising (107,620) (60,922) (144,250) (114,015)

Commissions (8,880) — (48,500) —

Insurance (other 

than health) (8,250) (1,548) (7,800) (1,015)

Legal and 

Professional 

Services

(17,220) — (18,200) —

Office Expense (4,250) (14,945) (4,800) (8,370)

Rent (113,100) (109,283) (103,500) (103,497)

Taxes and 

Licenses (4,180) (169,834) (4,440) (119,484)

Utilities (18,250) (6,796) (18,500) —

Cell Phone (4,250) — (6,220) —

Occasional Help — — (5,500) —

Towing — (2,050) — (10,807)

Referral Fee — (177) — (600)

Refunds — (22,678) — (18,400)

Car and Truck 

Expenses — (239,263) — (228,480)

Net Profit $13,900 $1,410,374 $30,035 $1,011,613

[*9]
10

[*10] During this litigation, the parties stipulated the correctness of the 

expense amounts in RA Kaplan’s bank accounts analysis (as reflected in 

the preceding table) in the following categories for both years in issue: 

advertising, office expenses, rent, taxes and licenses, towing, referral 

fee, refunds, and car and truck expenses. The parties also stipulated 

the correctness of RA Kaplan’s calculation of utilities expenses for 2011.

OPINION

I. Burden of Proof

Generally, the Commissioner’s determinations in a notice of 

deficiency are presumed correct, and the taxpayer bears the burden of 

proving them erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 

111, 115 (1933). In cases of unreported income, the Commissioner must 

establish an evidentiary foundation connecting the taxpayer with an

income-producing activity or otherwise demonstrate that the taxpayer 

actually received income. Walquist v. Commissioner, 152 T.C. 61, 67 

(2019). Once the Commissioner makes the required threshold showing, 

the burden shifts to the taxpayer to prove by a preponderance of the 

evidence that the Commissioner’s determinations are arbitrary or 

erroneous. Id. at 67–68.

II. Income Reconstruction

If a taxpayer fails to maintain adequate records of income as 

required under section 6001, the Commissioner may reconstruct his 

income by any reasonable method that clearly reflects income. See

I.R.C. § 446(b); Holland v. United States, 348 U.S. 121, 130–32 (1954); 

Harper v. Commissioner, 54 T.C. 1121, 1129 (1970). One indirect 

method of income reconstruction is a bank accounts analysis, 

incorporating both deposits and expenditures. We have long accepted 

bank accounts analysis as a reasonable reconstruction method. See, e.g., 

Nicholas v. Commissioner, 70 T.C. 1057, 1064–65 (1978); Harper, 54 

T.C. at 1129. While not conclusive, bank deposits are prima facie 

evidence of income. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). 

The taxpayer bears the burden of showing that the deposits came from 

a nontaxable source. See Rule 142(a); Harper, 54 T.C. at 1129. For 

purposes of a bank accounts analysis, all money deposited into a 

taxpayer’s account is presumed to be taxable unless the taxpayer can 

show otherwise. DiLeo v. Commissioner, 96 T.C. 858, 868 (1991), aff’d, 

959 F.2d 16 (2d Cir. 1992). However, the Commissioner must account 
11

[*11] for any nontaxable deposits or deductible expenses of which he is 

aware. Id.

Mr. Alvarado failed to maintain adequate records of South Bay’s 

income. The collection of car jackets he provided to RA Kaplan was 

patently incomplete, as indicated by the large gap for each year in issue 

between (a) the sum of sale prices listed in the jackets and (b) RA 

Kaplan’s bank accounts analysis of gross receipts. (Indeed, Mr. 

Alvarado himself conceded as much.) The number of car jackets for 2011 

(265) is considerably less than the number of car purchases financed by 

Topaz that year (291).

The other records Mr. Alvarado produced during the IRS internal 

appeal and this litigation are likewise insufficient to compute net 

income. The DealerCenter records do not indicate when (if ever) a car 

was sold or the amount of South Bay’s gross receipts for any sale. 

Neither the Topaz reports nor the Premier transaction summaries 

indicate how much South Bay originally paid for the cars it sold to 

customers. And the Topaz quarterly reports contain VINs only for the 

cars whose buyers defaulted on their loans. Overall, we cannot 

generally match the gross receipts that South Bay received from Topaz 

or Premier with other evidence in the record concerning South Bay’s 

purchase prices for its inventory (i.e., cost of goods sold). If all these 

pieces of evidence could somehow be collated to yield full and accurate 

records of South Bay’s net profit (which appears unlikely), Mr. Alvarado 

has made no effort to show us how. We therefore generally accept the 

Commissioner’s reconstruction of Petitioners’ net income via RA 

Kaplan’s bank accounts analysis, subject to certain adjustments 

discussed below.

A. Gross Receipts

Mr. Alvarado disputes the Commissioner’s refusal to reduce 

South Bay’s gross receipts by the sum of payments from South Bay to 

Topaz: $100,313 in 2011 and $80,519 in 2012. Mr. Alvarado testified at 

trial that these amounts represented downpayments that customers 

made to South Bay and that South Bay then remitted to Topaz when 

Topaz purchased those customers’ loans. On brief the Commissioner 

argues that Mr. Alvarado failed to show a paper trail of funds moving 

from customers to Topaz via South Bay, with one exception: One 

customer made a downpayment of $395 to South Bay on November 2, 

2011, while a check (written close in time) from South Bay to Topaz on 

November 7, 2011, for $827.42 includes a written breakdown for (in 
12

[*12] part) $394.78 corresponding to a loan number that matches a loan 

on one of the contemporaneous Topaz quarterly reports. 

We found credible Mr. Alvarado’s testimony that the only 

payments South Bay made to Topaz were related to customer 

downpayments. On this point we return to the bank accounts analysis 

on which South Bay’s income was reconstructed and reiterate that a 

taxpayer may bring forward proof that certain deposits should not be 

considered taxable. Where, as here, payments were made back to Topaz 

for customer deposits related to sales contracts assigned to Topaz and 

funded by Topaz, the corollary return of a portion of that funding should 

reduce gross income.

In addition, Mr. Alvarado argues that we should reduce South 

Bay’s gross receipts by the full amount of the Topaz “returned loans”—

that is, the outstanding balances of customers who defaulted on the 

loans that Topaz acquired, as listed in the quarterly summary reports. 

South Bay guaranteed these loans. However, each quarterly summary 

report reduces South Bay’s “Total Accounts Receivable” by “Total 

Returns,” indicating that (at least in many cases) Topaz simply offset its 

payments to South Bay for new loans by a running total of previously 

purchased loans that had gone into default. In that case, South Bay 

would not transfer money to Topaz to make good on its guaranty of the 

customers’ loans; rather, its gross receipts from Topaz would already 

reflect the reduction. Therefore, reducing South Bay’s gross receipts by 

the amount of the returned loans would effectively give Petitioners a 

double deduction.

We therefore modify the Commissioner’s bank accounts analysis 

to account for the proven payments from South Bay to Topaz ($100,313 

in 2011 and $80,519 in 2012), yielding gross receipts of $2,938,484 for 

2011 and $2,482,300 for 2012.

B. Cost of Goods Sold

Cost of goods sold is a reduction made in the course of computing 

gross income. Treas. Reg. § 1.61-3(a). It is not a deduction and so is not 

subject to the limitations of section 162, which generally denies a 

deduction for business expenses unless they are “ordinary and 

necessary” for the business in question. See, e.g., Metra Chem Corp. v. 

Commissioner, 88 T.C. 654, 661 (1987); Nunn v. Commissioner, T.C. 

Memo. 2002-250, 84 T.C.M. (CCH) 403, 408. In the case of cash basis 

taxpayers such as Petitioners, the cost of goods sold reduces gross 
13

[*13] income only for the tax year when cash or other property is 

received in exchange for the goods. See Treas. Reg. § 1.61-3(a) (“[A]n 

amount cannot be taken into account in the computation of cost of goods

sold any earlier than the taxable year in which economic performance 

occurs with respect to the amount . . . .”).

A taxpayer is required to maintain sufficient permanent records 

to substantiate all components of reported net income, including cost of 

goods sold. See I.R.C. § 6001; Treas. Reg. § 1.6001-1(a), (e). However, 

the Court may estimate cost of goods sold under a variation of the Cohan

rule, see Cohan v. Commissioner, 39 F.2d 540, 543–44 (2d Cir. 1930),

even when cost of goods sold is not fully substantiated, provided that 

there is a reasonable basis for making such an estimate, Olive v. 

Commissioner, 139 T.C. 19, 34 (2012), aff’d, 792 F.3d 1146 (9th Cir. 

2015). Under the Cohan rule, if a taxpayer adequately establishes that 

he paid or incurred a deductible expense but does not establish the 

precise amount, then the Court may in some instances estimate the 

allowable deduction. Cohan v. Commissioner, 39 F.2d at 543–44. But 

the taxpayer must provide some reasonable basis for such an estimate. 

See Vanicek v. Commissioner, 85 T.C. 731, 742–43 (1985). In making an 

estimate under the Cohan rule, the Court “bear[s] heavily if it chooses 

upon the taxpayer whose inexactitude is of his own making.” Cohan v. 

Commissioner, 39 F.2d at 544. While the Cohan rule by its terms applies 

to deductible expenses, this Court has adapted it to estimate cost of 

goods sold as well. See, e.g., Olive, 139 T.C. at 34; Alterman v. 

Commissioner, T.C. Memo. 2018-83, at *30–31; Huzella v. 

Commissioner, T.C. Memo. 2017-210, at *7–9.

The Commissioner’s final position on brief is that Petitioners are 

entitled to cost of goods sold of $1,000,927 for 2011 and $946,538 for 

2012. These amounts comprise the purchase prices of all cars for which 

Mr. Alvarado provided proof of both purchase and sale in 2011 or 2012, 

as identified by matching VINs. The Commissioner did not allow cost of 

goods for any purchases occurring before 2011, out of concern that Mr. 

Alvarado may have immediately deducted such purchases. As a result, 

the Commissioner takes the extreme position that many of the used cars 

sold in the years in issue had no inventory cost whatsoever. The 

Commissioner’s analysis results in costs of goods sold of 34% of sales for 

2011 and 38% for 2012, making gross margins for South Bay’s used cars 

sales in the years in issue well over 60%, an implausible amount.

We hold that the law does not require this bizarre result. Rather, 

we include in South Bay’s costs of goods sold for the years in issue the 
14

[*14] purchase prices of any cars sold in those years for which Mr. 

Alvarado provided credible records along with an estimate of the cost of 

other cars sold during the years in issue for which we can conservatively 

estimate an inventory cost. For this purpose, we find the DealerCenter 

printouts credible as contemporaneous business records: For several 

hundred cars, they list VIN, car model and year, mileage, vehicle cost, 

date in stock, and asking price. There is nothing facially suspicious

about them. The Commissioner objected to these records for the 

following reasons: (1) Mr. Alvarado never provided or mentioned these 

records during the examination; (2) some of the printouts list a “Date in 

Stock” of January 1, 2011, yet it seems unlikely that auto auctions were 

open on a national holiday; and (3) some of the printouts list a “Days in 

Stock” number of around 3,000, approximately the number of days 

between early 2011 and mid-2019, when Mr. Alvardo first provided the 

printouts to the IRS. The Commissioner suggests that Mr. Alvarado 

may have retroactively generated these records for purposes of his 

internal appeal with the IRS, casting serious doubt on their accuracy.

The Commissioner’s concerns ultimately are unconvincing. Mr. 

Alvarado credibly testified that he subscribed to and used DealerCenter 

during the years in issue. Only about five records out of several hundred 

list a Date in Stock of January 1, 2011. Two records list a Date in Stock 

of January 1, 2012. As well, it appears that all the printouts listing 

“Days in Stock” of over 3,000 also list the “Vehicle Status” as “In 

Inventory.” (Those with a Vehicle Status of “Sold” tend to list Days in 

Stock of under 200.) This is not surprising considering Mr. Alvarado’s 

testimony that he printed the records during his internal appeal with 

the IRS, after temporarily regaining access to his DealerCenter account 

(for which he had stopped paying years earlier). It stands to reason that 

the records, accessed years later, would contain apparent temporal 

anomalies for cars that Mr. Alvarado or his employees had never marked 

“Sold.” Overall, we find it more likely than not that the DealerCenter 

records are authentic and reliable, despite Mr. Alvarado’s somewhat 

confused answers to questions at trial about why he did not provide 

them to RA Kaplan during the initial examination.

Mr. Alvarado submitted to the Court a marked-up version of RA 

Kaplan’s car purchase spreadsheets, adding purchase prices that she did 

not include (typically because the purchase date was pre-2011) but that 

appeared under matching VINs in the DealerCenter printouts. For the 

reasons stated above, we accept these additions to South Bay’s cost of 

goods sold for the years in issue, except for (1) a $3,000 purchase price 

for a 1998 Toyota Sienna sold on September 4, 2012, and (2) a $3,595 
15

[*15] purchase price for a 2000 Toyota Camry sold on May 20, 2012. RA 

Kaplan’s spreadsheets indicate that these same cars were previously 

sold on May 13 and January 20, 2012, respectively, leading us to 

conclude that the initial customers returned the vehicles or that South 

Bay repossessed them. In either case South Bay should receive an 

addition to cost of goods sold for these cars only once. We also have 

cross-checked the low-outlier purchase prices on RA Kaplan’s 

spreadsheets (with a purchase-to-sales price ratio of under 0.1) with the 

DealerCenter printouts. Having found two discrepancies, we increase 

the purchase price of a 2004 Chrysler Pacifica (sold on November 13, 

2012) from $493.77 (per RA Kaplan’s spreadsheets) to $5,740 (per 

DealerCenter), and we increase the purchase price of a BMW 5 Series 

(sold on November 20, 2012) from $642.97 (per RA Kaplan’s 

spreadsheets) to $6,340 (per DealerCenter).6

These additions yield tentative costs of goods sold of $1,224,593 

for 2011 and $1,238,416 for 2012, as more thoroughly detailed at 

Appendixes A and B. However, we cannot take these figures as final 

because the cars whose purchase prices are included in these figures 

(hereafter, purchase-verified cars) clearly do not account for all of South 

Bay’s gross receipts for the years in issue. For instance, when we sum 

the sale prices (based on the contracts in the car jackets) of the purchaseverified cars, we arrive at gross receipts of $2,139,642 for 2011 and 

$2,298,644 for 2012. These sums are substantially lower than the gross 

receipts we found above ($2,938,484 for 2011 and $2,482,300 for 2012). 

Further, South Bay’s actual gross receipts for the purchase-verified cars 

are almost certainly lower still: Mr. Alvarado’s testimony, the Topaz 

reports, and the Premier summaries all demonstrate that South Bay 

often received only a fraction of a car’s jacket-listed sale price (at least 

during the year of sale), because of a combination of (1) the financers’ 

policy of holding back a reserve amount and (2) the frequency of 

customer defaults on their loans (in which case South Bay had to 

reimburse the financers).

Since the purchase-verified cars clearly do not account for all of 

South Bay’s gross receipts, our foregoing estimates of cost of goods 

sold—which were based only on the purchase-verified cars—are 

inadequate. See Cohan v. Commissioner, 39 F.2d at 544 (“[T]he Board 

6 On the marked-up versions of RA Kaplan’s spreadsheets, Mr. Alvarado added 

some missing purchase prices by citing copies of canceled checks rather than the 

DealerCenter printouts. We ignore these citations because the checks either match 

the DealerCenter printouts or do not indicate either VIN or car model/year.
16

[*16] [of Tax Appeals] should make as close an approximation as it can 

. . . . [T]o allow nothing at all appears to us inconsistent with saying 

that something was spent.”). We must estimate the gaps between the 

gross receipts from the purchase-verified cars and the total gross 

receipts we found above, and then extrapolate cost of goods sold figures

for the unrecorded car sales responsible for the gap.

However, even our first step—estimating the gaps—is not 

straightforward. Mr. Alvarado was unable to show the Court what 

South Bay’s actual gross receipts were for any of the purchase-verified 

cars, and the records he submitted do not clearly reveal this information. 

(For instance, the Topaz reports do not indicate the VINs or models of 

the cars whose sales contracts were assumed by Topaz, nor how much 

Topaz paid for these contracts individually.) It might be possible to infer 

South Bay’s actual gross receipts for some of the purchase-verified cars 

by cross-checking the copies of canceled checks paid to South Bay, the 

Topaz reports, the Premier summaries, and RA Kaplan’s spreadsheets 

(as supplemented by Mr. Alvarado). However, we will not do Mr. 

Alvarado’s work for him. His burden of proof includes the burden of

clearly explaining how admissible evidence supports his case, and he . . .

may not merely “dump” data for the Court to wade through on its own. 

“Judges are not expected to be mindreaders. Consequently, a litigant 

has an obligation to ‘spell out [his] arguments squarely and distinctly,’ 

or else forever hold [his] peace.” Rivera-Gomez v. De Castro, 843 F.2d 

631, 635 (1st Cir. 1988) (quoting Paterson-Leitch Co. v. Mass. Mun. 

Wholesale Elec. Co., 840 F.2d 985, 990 (1st Cir. 1988)); see also Hale v. 

Commissioner, T.C. Memo. 2010-229, 100 T.C.M. (CCH) 345, 347 (“We 

need not (and shall not) undertake the task of sorting through the 

voluminous evidence [the taxpayer] has provided in an attempt to see 

what is, and what is not, adequate substantiation of the items on [the 

taxpayer’s] return.”).

Thus, for purposes of the Cohan rule as adapted to cost of goods 

sold, we will “bear heavily” on Mr. Alvarado, see Cohan v. Commissioner, 

39 F.2d at 544, in part by assuming that South Bay’s actual gross 

receipts for each purchase-verified car equaled the sale price for that car 

listed in the car jacket. Accordingly, we estimate gross receipts from the 

purchase-verified cars of $2,139,642 for 2011 and $2,298,644 for 2012. 

See Appendixes A and B. However, our assumption leaves us with gross 

receipts gaps of $798,842 in 2011 and $183,656 in 2012—receipts that 

we have not yet associated with any cost of goods sold.
17

[*17] At this point the Cohan rule turns a friendlier eye on Mr. 

Alvarado, as we may estimate some associated costs of goods sold for the 

gross receipts in the gaps, provided some reasonable basis exists for 

doing so. See Cohan v. Commissioner, 39 F.2d at 544; Huzella v. 

Commissioner, T.C. Memo. 2017-210, at *7–9 (estimating cost of goods 

sold using eBay records and sales catalogs); Arizaga v. Commissioner, 

T.C. Memo. 2016-57, at *6–7 (estimating cost of goods sold for a 

restaurant that kept no relevant records); Heinbockel v. Commissioner, 

T.C. Memo. 2013-125, at *67–68 (estimating cost of goods sold for a 

personal shopping business at 50% of gross receipts).

As a threshold matter, we do have proof that for the following 

gross receipts there was no associated cost of goods sold or that there is 

no reasonable basis for estimating such cost: (1) $5,500 from the 

September 4, 2012, resale of a 1998 Toyota Sienna (as discussed above); 

(2) $7,900 from the May 20, 2012, resale of a 2000 Toyota Camry (as 

discussed above); (3) $2,350 of fees charged to Alvarado Tax Service 

customers for preparation of tax returns in 2012; and (4) $2,580 from a 

subtenant at South Bay’s business premises in Hawthorne, California 

in 2012. We are then left with $798,842 of gross receipts for 2011 and 

$165,326 of gross receipts for 2012 that appear to derive from car sales 

but for which we have not yet made any provision for costs of goods sold.

In analyzing the costs of goods sold for which we do have data, we 

note that the figures range from a low of 5% to over 100% of the ultimate 

sale prices, with an average cost of goods sold margin of 56.4% in 2011 

and 54.2% in 2012. See Appendixes A and B. Using these average 

margins as the basis for our estimate yields an average gross profit 

margin of around 45%, which is likely high given South Bay’s financial 

struggles and ultimate demise. However, given that we “bear heavily” 

on Mr. Alvarado for his failure to keep adequate records, see Cohan v. 

Commissioner, 39 F.2d at 544, we will proceed with these reasonable 

estimates. Applied to the remaining gross receipts in the gap, a cost of 

goods sold margin of 56.4% yields an estimated $450,547 of additional 

cost of goods sold for 2011, and a cost of goods sold margin of 54.2% yields 

an estimated $89,607 of additional cost of goods sold for 2012. We add 

these estimates to the figures for the purchase-verified cars ($1,224,593 

in 2011 and $1,238,416 in 2012) to find total cost of goods sold of 

$1,675,140 for 2011 and $1,328,023 for 2012.
18

C. Expenses

The parties stipulated most of the Commissioner’s revisions to 

South Bay’s Schedule C expenses for both years in issue, which were 

based on RA Kaplan’s bank accounts analysis. Unstipulated expense 

categories for both years in issue are the following: commissions, 

insurance (other than health), legal and professional services, and cell 

phone expense. For 2012, utilities and occasional help are also 

unstipulated.

At trial and on brief the only expense category Mr. Alvarado

challenged was legal and professional services. He testified that he 

hired a lawyer, Larry Rucker, to defend him in a suit brought against 

South Bay under the Americans with Disabilities Act. We find this 

testimony credible and accordingly allow a legal and professional 

services deduction of $10,000 for 2011 and $5,000 for 2012, based on the 

checks paid to “Law Offices of Fred Rucker” summarized in RA Kaplan’s 

bank account expenditures spreadsheets.

Since Mr. Alvarado did not dispute the Commissioner’s 

determinations in any of the other unstipulated expense categories at 

trial or on brief, we conclude that Petitioners have abandoned the 

disagreements they raised in their Petition about these expenses. See 

Nicklaus v. Commissioner, 117 T.C. 117, 120 n.4 (2001).

D. Redetermined Net Profit

After accounting for the foregoing adjustments to gross receipts, 

cost of goods sold, and expenses, we redetermine Schedule C net profit 

of $625,848 for 2011 and $544,609 for 2012. As stated earlier, 

Petitioners reported net profit of only $13,900 for 2011 and $30,035 for 

2012.

[*18]
19

2011 Form 1040, 

Schedule C

Determined by 

the IRS

Found by the 

Court

Gross Receipts $1,815,410 $3,038,797 $2,938,484

Cost of Goods 

Sold (1,515,510) (1,000,927) (1,675,140)

Legal and 

Professional 

Services

(17,220) — (10,000)

Other Expenses (268,780) (627,496) (627,496)

Net Profit $13,900 $1,410,374 $625,848

2012 Form 1040, 

Schedule C

Determined by 

the IRS

Found by the 

Court

Gross Receipts $2,538,525 $2,562,819 $2,482,300

Cost of Goods 

Sold (2,146,780) (946,538) (1,328,023)

Legal and 

Professional 

Services

(18,200) — (5,000)

Other Expenses (343,510) (604,668) (604,668)

Net Profit $30,035 $1,011,613 $544,609

III. Additions to Tax and Penalties

The Commissioner determined section 6651(a)(1) late-filing 

additions to tax against Petitioners and section 6663 fraud penalties

against Mr. Alvarado.7 The Commissioner has also determined against 

7 The Commissioner’s initial assertion of the section 6663 penalties, using 

Letter 950 (the “30-day letter”), did not distinguish between Mr. Alvarado and Ms. 

[*19]
20

[*20] Mr. Alvarado, as an alternative to the fraud penalties, section 

6662 accuracy-related penalties for underpayments of tax by reason of 

substantial understatements of income tax.

Under section 7491(c), the Commissioner bears the burden of 

production regarding penalties and additions to tax asserted against 

individuals and must come forward with sufficient evidence indicating 

that it is appropriate to impose them. Higbee v. Commissioner, 116 T.C. 

438, 446–47 (2001). One part of this burden is to show compliance with 

section 6751(b)(1), which provides that “[n]o penalty . . . shall be 

assessed unless the initial determination of such assessment is 

personally approved (in writing) by the immediate supervisor of the 

individual making such determination.” See Graev v. Commissioner, 

149 T.C. 485, 493 (2017), supplementing and overruling in part 147 T.C. 

460 (2016). Petitioners have not disputed that the Commissioner 

satisfied the supervisory approval requirement, and we see no evidence 

in the record to suggest otherwise.

A. Section 6651 Late-Filing Additions to Tax

Section 6651(a)(1) imposes an addition to tax for the failure to file 

a return on or before the due date (including extensions) unless the 

taxpayer can establish that such failure was “due to reasonable cause 

and not due to willful neglect.” (After five months or more of delay, the 

addition equals 25% of the amount of tax otherwise due.) To 

demonstrate reasonable cause, a taxpayer must show that he exercised 

ordinary business care and prudence but was nevertheless unable to file 

on time. United States v. Boyle, 469 U.S. 241, 246 (1985); Treas. Reg. 

§ 301.6651-1(c)(1).

Petitioners filed their 2011 joint income tax return over 9 months 

late, and they filed their 2012 return over 14 months late. At trial Mr. 

Alvarado explained the late filings as the result of his being 

overwhelmed with South Bay business and of his need to await financial 

information from Topaz. However, this Court has held that work 

demands—even extreme ones—do not constitute reasonable cause for 

purposes of section 6651(a)(1). Dustin v. Commissioner, 53 T.C. 491, 507 

(1969), aff’d, 467 F.2d 47 (9th Cir. 1972). And Mr. Alvarado failed to 

explain how, if at all, he used the Topaz reports to prepare the tax 

returns (which is not self-evident). We therefore sustain the 

Velasquez. The notices of deficiency made clear that the fraud penalties did not apply 

to Ms. Velasquez by virtue of section 6663(c).
21

[*21] Commissioner’s imposition of the section 6651(a)(1) addition to tax 

on Mr. Alvarado.8

B. Section 6663 Fraud Penalties

Section 6663(a) imposes a penalty equal to 75% of the taxpayer’s 

underpayment of tax that is due to fraud. A taxpayer commits fraud 

when he intentionally contrives to evade a tax liability that he knows to 

be owing. Maciel v. Commissioner, 489 F.3d 1018, 1026 (9th Cir. 2007), 

aff’g in part, rev’g in part T.C. Memo. 2004-28; Petzoldt v. Commissioner, 

92 T.C. 661, 698–99 (1989). If any portion of the underpayment is 

attributable to fraud, the entire underpayment will be treated as 

fraudulent unless the taxpayer establishes by a preponderance of the 

evidence that part of the underpayment is not due to fraud. I.R.C. § 

6663(b). Section 6664(a) provides that for purposes of the fraud penalty, 

“underpayment” generally means “the amount by which any tax 

imposed by this title [i.e., the Code] exceeds . . . the amount shown as 

the tax by the taxpayer on his return.”

The Commissioner has the burden of proving fraud by clear and 

convincing evidence. See I.R.C. § 7454(a); Rule 142(b). To carry that 

burden for a given tax year, the Commissioner must show that (1) an 

underpayment of tax exists for that year and (2) some part of the 

underpayment is attributable to fraud. See I.R.C. §§ 6663(a), 7454(a); 

DiLeo, 96 T.C. at 873. The existence of fraud is a question of fact to be 

resolved upon consideration of the entire record. DiLeo, 96 T.C. at 874. 

Fraud is never presumed and must be established by clear and 

convincing evidence of fraudulent intent. Baumgardner v. 

Commissioner, 251 F.2d 311, 322 (9th Cir. 1957), aff’g T.C. Memo. 1956-

112. Since direct evidence of a taxpayer’s fraudulent intent is seldom 

available, fraud may be shown by circumstantial evidence. Bradford v. 

Commissioner, 796 F.2d 303, 307 (9th Cir. 1986), aff’g T.C. Memo. 1984-

601; Petzoldt, 92 T.C. at 699. The taxpayer’s entire course of conduct 

may establish the requisite fraudulent intent. Niedringhaus v. 

Commissioner, 99 T.C. 202, 210–11 (1992).

The circumstantial evidence by which the Commissioner may 

prove fraud includes various “badges of fraud” on which courts often 

rely. See Bradford v. Commissioner, 796 F.2d at 307; DiLeo, 96 T.C. at 

875. These badges focus on whether the taxpayer engaged in certain 

8 Again, Ms. Velasquez is not liable for this penalty by virtue of the relief 

provided by section 6015(b), as conceded by the Commissioner.
22

[*22] conduct that is indicative of fraudulent intent, such as 

(1) understating income, (2) failing to maintain adequate records,

(3) offering implausible or inconsistent explanations, (4) concealing 

income or assets, (5) failing to cooperate with tax authorities,

(6) engaging in illegal activities, (7) providing incomplete or misleading 

information to a tax return preparer, (8) filing false documents, 

including false income tax returns, (9) failing to file tax returns or filing 

them late, and (10) engaging in extensive dealings in cash. See Bradford

v. Commissioner, 796 F.2d at 307–08; Parks v. Commissioner, 94 T.C. 

654, 664–65 (1990). The existence of any one badge is not dispositive, 

but the existence of several badges may be persuasive circumstantial 

evidence of fraud. Niedringhaus, 99 T.C. at 211. We may also consider 

a taxpayer’s education, training, business experience, and knowledge of 

income tax laws in deciding whether he acted with fraudulent intent. 

Worsham v. Commissioner, T.C. Memo. 2012-219, 104 T.C.M. (CCH)

129, 134, aff’d, 531 F. App’x 310 (4th Cir. 2013); see also Chico v. 

Commissioner, T.C. Memo. 2019-123, at *46–47, aff’d, No. 20-71017,

2021 U.S. App. LEXIS 30243 (9th Cir. Oct. 8, 2021).

We must now decide whether the Commissioner has introduced 

clear and convincing evidence that Mr. Alvarado has an underpayment 

(as defined in section 6664(a)) for each year in issue and that at least 

some portion of the underpayment for each year is due to fraud on Mr. 

Alvarado’s part. We begin by noting the obvious implication of our 

deficiency analysis, that either Mr. Alvarado did not keep adequate 

records of South Bay’s used car inventory purchases and sales or he did 

not provide such records to the Commissioner and this Court. In either 

event, under our caselaw we may accept a bank accounts analysis for 

South Bay’s gross income and adapt the Cohan rule to estimate South 

Bay’s costs of goods sold. Any reasonable application of these rules 

yields tax liabilities in excess of what Petitioners reported on their 2011 

and 2012 returns (both of which showed a refund due, even before 

accounting for any withholding or estimated tax payments). We now 

clarify that the Cohan rule (and its adaptation to cost of goods sold) 

contributes to determining—rather than merely estimating—the tax 

imposed by the Code for those taxpayers who do not keep (or at least do 

not furnish) adequate financial records. Therefore, the Commissioner 

has satisfied his burden of proof for the first element of fraud: There is 

clear and convincing evidence that Mr. Alvarado did not keep (or 

furnish) adequate records for South Bay and that he underpaid his 

income tax for both years in issue within the meaning of section 6664(a).
23

[*23] However, our analysis in this case “b[ore] heavily” on Mr. 

Alvarado because his own behavior of keeping incomplete and scattered 

records created the need for estimates in the first place. In particular, 

we assumed (unfavorably to Mr. Alvarado) that for each of the purchaseverified cars South Bay received the full sale price listed in the contract 

in the car jacket. And we then assumed (unfavorably to Mr. Alvarado) 

that all cars other than the purchase-verified cars had average cost of 

goods sold margins relative to those of the purchase-verified cars (this 

latter margin being measured under the first unfavorable assumption). 

However, the Topaz reports and Premier summaries show it to be just 

as likely that South Bay received only fractions of the listed sale prices

for most of the cars it sold, owing to the subprime financing 

arrangements for most customers.

If we use the Topaz-financed cars as a basis for estimating 

average receipts for all cars, we find an average of $7,145 per car in 2011 

and $5,720 per car in 2012. (Topaz made total payments to South Bay 

of $2,079,310 for 291 contracts in 2011, and it paid $915,239 for 160 

contracts in 2012.) Meanwhile, the purchase-verified cars had an 

average cost (that is, the price South Bay paid for them) of $6,123 in 

2011 and $5,049 in 2012. Using those numbers, the cost of goods sold 

margin would be between 86% (in 2011) and 88% (in 2012), much higher 

than the figures we determined under the Cohan rule (56.4% in 2011 

and 54.2% in 2012). The result would then be gross profit margins 

between 12% and 14%, which, after accounting for South Bay’s 

expenses, would result in net losses rather than the profitability that we 

determined.

Because we find it just as likely that South Bay had negative net 

profit as positive net profit for both years in issue, we lack clear and 

convincing evidence that Mr. Alvarado believed he and Ms. Velasquez 

owed more tax than they reported and paid. Yet the second component 

of the section 6663 fraud penalty requires that the taxpayer knew (and 

thus believed) he owed more tax than he reported and paid. See Petzoldt, 

92 T.C. at 698. If South Bay in fact had no positive net profit in either 

year, then given the evidence that Petitioners had no other substantial 

income in either year, Mr. Alvarado likely did not believe he and Ms. 

Velasquez owed any positive amount of income tax for either year.

Mr. Alvarado held a PTIN and prepared returns for some other 

taxpayers, and he was a commercial lender at Comerica Bank for over 

two decades. However, a trained tax professional in Mr. Alvarado’s 

presumptive position—that is, palpably suffering business losses but 
24

[*24] devoid of the records to prove it—reasonably could have believed 

his business would not have tax liabilities for the years in issue. Cf.

Capp v. Commissioner, T.C. Memo. 1968-53, 27 T.C.M. (CCH) 280, 283

(“[W]e must conclude here that the smattering of knowledge of taxation 

and accounting acquired in the [relevant] period and possessed by this 

[taxpayer] is not clear and convincing evidence of a specific intent to 

evade tax . . . .”). Because we find some probability that South Bay made 

zero or negative net profits for the years in issue, we find it meaningfully 

probable that Mr. Alvarado did not believe he and Ms. Velasquez were 

underreporting or underpaying their income tax.

True, Mr. Alvarado kept inadequate records for South Bay; he 

and Ms. Velasquez filed their tax returns late several years in a row; the 

various inputs on the Schedules C that Mr. Alvarado prepared for both 

years in issue appear to be estimated (as all amounts end in “0” or “5”); 

Mr. Alvarado initially failed to reveal to RA Kaplan that he prepared 

some tax returns for pay; and Mr. Alvarado repeatedly delayed meetings 

with IRS agents, sometimes failed to appear at meetings absent a 

summons, and only inconsistently complied with document requests 

(including during the lead-up to trial). We certainly do not condone any 

of these practices, and we admonish Mr. Alvarado for his poor behavior. 

Nonetheless, these facts are consistent with a mixture of negligence and 

being overwhelmed by his failing business venture. They do not add up 

to a compelling counterweight to the above considerations regarding the 

probability that Mr. Alvarado did not believe he underreported or 

underpaid his tax liabilities. The apparent fabrication of inputs on the 

Schedules C is perhaps the most concerning factor, but even this is 

consistent with Mr. Alvarado’s having a rough sense of what South Bay’s 

actual net profits were and trying to “reverse-engineer” those amounts

on the tax returns (perhaps erring on the side of overestimation).

Although Petitioners underreported and underpaid their income 

tax liabilities, we lack clear and convincing evidence that Mr. Alvarado 

believed they owed more. Thus, we do not find him liable for the fraud 

penalty under section 6663.

C. Section 6662 Accuracy-Related Penalties

Section 6662 provides for a 20% accuracy-related penalty on an 

underpayment of tax attributable to (among other things) a substantial 

understatement of income tax. I.R.C. § 6662(a), (b)(2). An 

understatement of income tax generally means the excess of tax 

required to be reported on the return over the amount of tax shown on 
25

[*25] the return. I.R.C. § 6662(d)(2)(A). In the case of an individual, an 

understatement is “substantial” if it exceeds the greater of 10% of the 

tax required to be shown on the return or $5,000. I.R.C. § 6662(d)(1)(A). 

Unlike the section 6663 fraud penalty, the accuracy-related penalty 

requires the Commissioner to carry the burden of production but not the 

burden of proof with respect to the accuracy-related penalty. I.R.C. 

§ 7491(c); Rule 142(a); Higbee, 116 T.C. at 446–49. Given the amount of 

net profit that we have redetermined for each year in issue, Mr. 

Alvarado clearly has a substantial understatement of income tax for 

each year.

The accuracy-related penalty under section 6662(a) and (b)(2) 

does not apply if the taxpayer had reasonable cause for the substantial 

understatement and acted in good faith. I.R.C. § 6664(c)(1). Mr. 

Alvarado offered no evidence that he qualifies for the reasonable cause 

exception, and we see none in the record. Accordingly, we hold Mr. 

Alvarado liable for the accuracy-related penalty on his entire 

underpayment for each year in issue.

IV. Conclusion

We hold that for the years in issue, in addition to the 

Commissioner’s concessions and before the application of section 6015(b) 

relief for Ms. Velasquez and her estate, Petitioners’ gross income, cost of 

goods sold, and Schedule C expenses must be adjusted as redetermined 

above; and Petitioners are liable for the section 6651(a)(1) additions to 

tax. Mr. Alvarado is also subject to accuracy-related penalties under 

section 6662(a) and (b)(2) for both years in issue.

We have considered all the arguments made by the parties and, 

to the extent they are not addressed herein, we find them to be moot, 

irrelevant, or without merit.

To reflect the foregoing,

Decision will be entered under Rule 155.
26

APPENDIX A – 2011

VIN

Date of 

Sale Car Sales Price

Cost of 

Goods Sold 

(COGS)

COGS 

Margin

WAUED68D2WA058468 12/23/2011 98 Audi $7,900.00 $3,676.15 46.5%

IGYEC63T92R133421 2/12/2011 2002 Cadillac Escalade $13,000.00 $7,870.62 60.5%

2FMZA5243BA92177 5/21/2011 2003 Ford Windstar $7,900.00 $3,800.00 48.1%

2FTRX17W93CAG7941 8/13/2011 2003 Ford F-150 $7,350.00 $6,133.61 83.5%

1GKEK63U73J314216 1/10/2011 2003 GMC Yukon $13,900.00 $7,918.15 57.0%

4F2YZ0616SKM08491 12/28/2011 2005 Mazda Tribute $8,700.00 $5,000.00 57.5%

SAJEA51C03WD37041 11/12/2011 2003 Jaguar X-Type $7,900.00 $4,292.69 54.3%

1GCCS19W028188575 9/2/2011 2002 Chevrolet S10 Ext $9,500.00 $4,770.03 50.2%

WBAGL63444DP71595 1/3/2011 2004 BMW 7 Series $13,500.00 $14,110.53 104.5%

WDBJF65J818384279 2/24/2011 2001 Mercedes-Benz $9,900.00 $6,009.58 60.7%

WDBUF70JX3A221796 3/12/2011 2003 Mercedes-Benz $14,500.00 $10,569.81 72.9%

WBABM3344YJN63035 6/3/2011 2000 BMW 3 Series $6,900.00 $4,400.00 63.8%

2FMZA514828805546 8/28/2011 2002 Ford Windstar $5,900.00 $2,932.96 49.7%

WBANA735458818181 7/30/2011 2005 BMW 5 Series $17,900.00 $12,500.00 69.8%

5UMEU27A21U066589 8/14/2011 2001 Lincoln Navigator $7,000.00 $6,080.00 86.9%

1GNEK13R4WJ341993 6/25/2011 1998 Chevrolet Tahoe $8,900.00 $3,100.00 34.8%

1GNDS135532299418 6/26/2011 2003 Chevrolet Trail Blazer $7,540.33 $5,300.00 70.3%

1G6DM57N730145001 1/23/2011 2003 Cadillac CTS $10,900.00 $6,177.07 56.7%

SALTY15422A742641 10/20/2011 2002 Land Rover Discovery $6,240.00 $3,850.42 61.7%

2GCEC19T7Y1159954 5/25/2011 2000 Chevrolet Silverado 1500 $9,900.00 $5,013.54 50.6%

[*26]
27

[*27]

WBAGN63412DR07821 1/16/2011 2002 BMW 7 Series $16,000.00 $10,989.52 68.7%

1GKEK63U91J237376 1/26/2011 2001 GMC Yukon $11,900.00 $5,900.00 49.6%

1GNEC13T31R116676 2/20/2011 2001 Chevrolet Tahoe $12,900.00 $6,600.00 51.2%

JT88H68X8Y0024577 7/26/2011 2000 Lexus GS $11,900.00 $6,982.93 58.7%

1GYEK63N12R03768 1/20/2011 2002 Cadillac Escalade $13,400.00 $8,100.00 60.4%

1GCEK19T31E253904 9/4/2011 2001 Chevrolet Silverado 1500 $7,600.00 $4,679.22 61.6%

WDBRF61J81F071332 3/11/2011 2001 Mercedes-Benz C Class $12,900.00 $6,250.00 48.4%

1GCEC19R4TE244357 9/26/2011 1996 Chevrolet 1500 Extended $8,900.00 $3,800.00 42.7%

WBAAM3346YCB24891 2/10/2011 2000 BMW 3 Series $10,900.00 $5,000.00 45.9%

3GKEC16T12G358182 9/2/2011 2000 GMC Yukon XL 1500 $10,900.00 $6,200.00 56.9%

WDBNG75J72A254392 2/18/2011 2002 Mercedes Benz S Class $12,900.00 $6,500.00 50.4%

STBRN341X25314096 12/26/2011 2002 Toyota Tundra Access $8,900.00 $5,390.00 60.6%

SAJEA51DX2XC32685 3/12/2011 2002 Jaguar X-Type $10,900.00 $6,100.00 56.0%

JT6HF10UXX0030523 2/12/2011 1999 Lexus $10,900.00 $5,324.19 48.8%

1FMZU63E72UA34725 3/7/2011 2002 Ford Explorer $10,900.00 $5,180.00 47.5%

WDBNG78J52A239126 8/5/2011 2002 Mercedes Benz S Class $16,900.00 $13,347.31 79.0%

JT8BD68S8X0074958 1/31/2011 1999 Lexus GS $10,900.00 $5,700.00 52.3%

2GIFP22G8Y2128887 4/8/2011 2000 Chevrolet Camero $11,900.00 $7,192.95 60.4%

JT8BH68X7W0011610 7/28/2011 1998 Lexus GS $12,900.00 $6,500.00 50.4%

2HKRL1862XH512692 110/4/11 1999 Honda Odyssey $10,900.00 $6,000.00 55.0%

WBAEV33452KL67097 8/25/2011 2002 BMW 3 Series $11,250.00 $5,736.70 51.0%

WBABM3345YJN81012 4/9/2011 2000 BMW 3 Series $8,900.00 $4,505.00 50.6%

4TEJ062N86Z313083 2/22/2011 2006 Toyota Tacoma Double $19,900.00 $15,321.84 77.0%
28

[*28]

JNKCV51E23M013611 11/19/2011 2003 Infiniti G $10,900.00 $6,200.00 56.9%

JTKDE177370159013 9/6/2011 2007 Scion TC $12,900.00 $10,329.009 80.1%

WDBRF64JX2E002046 5/5/2011 2002 Mercedes Benz S Class $10,900.00 $7,000.00 64.2%

WDBNG70J72A242380 2/10/2011 2002 Mercedes Benz S Class $13,900.00 $6,700.00 48.2%

WBAFA5355ILM89729 4/8/2011 2001 BMW X5 $15,900.00 $9,168.55 57.7%

WAUDC68D61A114547 9/28/2011 2001 Audi A4 $10,900.00 $5,540.00 50.8%

WDBNG70J01A174051 11/26/2011 2001 Mercedes Benz S Class $10,900.00 $5,000.00 45.9%

2C3HE6GX1H602336 1/27/2011 2001 Chrysler 300 $6,900.00 $3,542.84 51.3%

1GNEC13V92R265824 8/14/2011 2002 Chevrolet Tahoe $12,900.00 $7,776.62 60.3%

1LNHM87ASYY822595 7/16/2011 2000 Lincoln LS $9,900.00 $4,695.00 47.4%

WDBPJ78J92A019773 9/6/2011 2002 Mercedes Benz CL Class $22,900.00 $15,000.00 65.5%

1GNEC16T831215183 8/19/2011 2003 Chevrolet Suburban 1500 $13,900.00 $8,500.00 61.2%

WDBNG70J5YA29033 9/15/2011 2000 Mercedes Benz S Class $11,700.00 $5,915.58 50.6%

3GNCK18R5XG230638 8/11/2011 1999 Chevrolet Tahoe $6,900.00 $3,758.50 54.5%

1GNEC13T83R248013 3/11/2011 2003 Chevrolet Tahor $13,900.00 $8,000.00 57.6%

1FMEU15L83LA22622 5/8/2011 2003 Ford Expedition $10,700.00 $5,500.00 51.4%

2FTZX07291CA68723 6/17/2011 2001 Ford F150 Super Cab $9,900.00 $6,266.05 63.3%

2GIWF55E119254200 12/24/2011 2001 Chevrolet Impala $6,900.00 $900.71 13.1%

1GNEC13T01J140318 1/20/2011 2001 Chevrolet Tahoe $13,400.00 $7,369.55 55.0%

1FAFP33P82W225238 1/3/2011 2002 Ford Focus $4,900.00 $5,900.00 120.4%

1FMCU04122KA15543 7/21/2011 2002 Ford Focus $10,500.00 $4,700.00 44.8%

9 COGS figures in bold (and the associated COGS margins) were reflected in the DealerCenter printouts but not in RA Kaplan’s 

spreadsheets.
29

[*29]

2MEHM75V73X625035 3/30/2011 2003 Mercury Marauder $10,900.00 $5,500.00 50.5%

1FAFP34302W255300 10/30/2011 2002 Ford Focus $7,900.00 $3,300.00 41.8%

1FMZU62E72Z837311 7/6/2011 2002 Ford Explorer $7,900.00 $4,747.06 60.1%

W06VR54R9VR153773 2/4/2011 1996 Cadillac Catera $4,400.00 $2,500.00 56.8%

WDBNG75J71A208897 6/9/2011 2001 Mercedes Benz S Class $11,900.00 $6,800.00 57.1%

WBAGL634X2DP56418 8/4/2011 2002 BMW 7 Series $14,250.00 $6,500.00 45.6%

WDBJF55F6VJ030620 6/1/2011 1997 Mercedes Benz E Class $7,900.00 $5,321.20 67.4%

1GYEK1388XR413817 12/20/2011 1999 Cadillac Escalade $8,800.00 $3,675.00 41.8%

4T3ZF19CXYU305151 2/20/2011 2000 Toyota Sienna $7,900.00 $4,000.00 50.6%

1N4DL01D9XC230595 12/6/2020 1999 Nissan Altima $2,900.00 $1,000.00 34.5%

1GYEK13R0YR165578 9/29/2011 2000 Cadillac Escalade $10,900.00 $5,000.00 45.9%

1N4AL11D95N923502 4/25/2011 2005 Nissan Altima $12,900.00 $6,700.00 51.9%

JN8DR09X71W568112 2/15/2011 2001 Nissan Pathfinder $9,900.00 $4,300.00 43.4%

1GCEC14V4YZ155179 1/13/2011 2000 Chevrolet Silverado 1500 $10,900.00 $5,324.19 48.8%

2FMZA51686BA63385 2/12/2011 2006 Ford Freestar $9,900.00 $4,420.79 44.7%

WDBNG75J0YA060408 7/16/2011 2000 Mercedes Benz S Class $13,900.00 $5,900.00 42.4%

WBAAM5345YFR20538 1/15/2011 2000 BMW 3 Series $9,900.00 $2,950.00 29.8%

LITARN81A0RZ162721 12/19/2011 1994 Toyota Truck $2,900.00 $1,000.00 34.5%

JTHBF30GG25031425 8/1/2011 2002 Lexus ES $14,900.00 $7,000.00 47.0%

JM3LW28G2Y0112956 4/16/2011 2000 Mazda MPV $5,900.00 $3,400.00 57.6%

WDBNG70J0YA006422 3/6/2011 2000 Mercedes Benz S Class $10,900.00 $4,500.00 41.3%

JT8BD68S0X0064974 1/26/2011 1999 Lexus GS 300 $9,900.00 $6,500.00 65.7%

2GCEK19T1X1263177 6/24/2011 1999 Chevrolet Silverado 1500 $10,500.00 $5,072.00 48.3%
30

[*30]

WBAAM3336YFP68460 6/10/2011 2000 BMW 3 Series $7,089.00 $4,951.67 69.9%

1GKEC13RXXJ748972 2/8/2011 1999 GMC Yukon $7,400.00 $3,400.00 45.9%

1G1ND52183M515735 6/14/2011 2003 Chevrolet Malibu $7,900.00 $3,987.96 50.5%

1GNDS135222376115 6/19/2011 2003 Chevrolet Trail Blazer $10,900.00 $5,390.00 49.4%

1GNEC13791R129556 12/8/2011 2001 Chevrolet Tahoe $10,000.00 $5,900.00 59.0%

4JGAB54E51A247328 8/20/2011 2001 Mercedes Benz ML $11,900.00 $6,877.65 57.8%

3VWSK69M93M012173 7/20/2011 2003 Volkswagen Jetta $8,900.00 $4,192.10 47.1%

1GBDV13147D176215 8/30/2011 2007 Chevrolet Uplander $8,900.00 $4,000.00 44.9%

1GKCC13T91R221865 8/10/2011 2001 GMC Yukon $11,900.00 $6,000.00 50.4%

JT8BH68X2Y0025675 2/2/2011 2000 Lexus GS $10,900.00 $5,200.00 47.7%

3GNEC16T42G356851 11/29/2011 2002 Chevrolet Suburban $9,900.00 $7,500.00 75.8%

1GKEC13R4XJ807790 2/6/2011 1999 GMC Yukon $8,900.00 $3,850.48 43.3%

2GCEC19V021179665 2/25/2011 2002 Chevrolet Suburban $9,300.00 $4,405.00 47.4%

WDBNG70J9YA106275 9/30/2011 2000 Mercedes Benz S Class $12,900.00 $6,340.00 49.1%

JN8DR09X71WS68112 12/9/2011 2001 Nissan Pathfinder $9,000.00 $4,300.00 47.8%

1GBFG15T341148789 5/9/2011 2004 Chevrolet Express 1500 $14,900.00 $12,000.00 80.5%

5TBRT38121S140345 2/27/2011 2001 Toyota Tundra $9,900.00 $6,426.29 64.9%

3GKEC16T4YG137345 3/26/2011 2000 GMC Yukon XL 1500 $7,900.00 $4,300.00 54.4%

4JGAB72E01A241435 3/26/2011 2001 Mercedes Benz ML Class $12,400.00 $5,547.59 44.7%

SALME114X3A135410 4/3/2011 2003 Land Rover Range Rover $18,999.00 $11,250.00 59.2%

1G6DM57N430143836 5/9/2011 2003 Cadillac CTS $12,900.00 $6,620.94 51.3%

3GNEC16TX1G131378 1/19/2011 2001 Chevrolet Suburban 1500 $9,900.00 $7,500.00 75.8%

JT88F28G0W5019503 10/26/2011 1998 Lexus ES $7,900.00 $5,878.00 74.4%

1N4AL11D76N317925 3/13/2011 2006 Nissan Altima $9,600.00 $7,000.00 72.9%
31

[*31]

2GTEC19T221379039 3/20/2011 2002 GMC Sierra 1500 Ext $9,900.00 $5,225.00 52.8%

1G1ZS52F75F186326 1/24/2011 2005 Chevrolet Malibu $7,900.00 $3,400.00 43.0%

1GCEC14V71Z110517 4/2/2011 2001 Chevrolet Silverado 1500 $7,900.00 $3,400.00 43.0%

WDBLJ65G4WF034448 1/16/2011 1998 Mercedes Benz CLK $7,900.00 $4,000.00 50.6%

19UUA56613A079444 2/27/2011 2003 Acura TL $10,900.00 $5,400.00 49.5%

1D4GP24R768673012 12/11/2011 2006 Dodge Grand Caravan $8,900.00 $6,006.48 67.5%

1LNHM87A52Y681048 10/9/2011 2002 Lincoln LS $9,900.00 $5,656.78 57.1%

JTEGH20V830095745 3/23/2011 2003 Toyota Rav4 $10,400.00 $5,700.00 54.8%

1GNEC13RSYR151847 12/16/2011 2000 Chevrolet Tahoe $7,900.00 $3,195.00 40.4%

1B3ESS6C04D502246 12/5/2011 2004 Dodge Neon $5,900.00 $2,700.00 45.8%

4JGAB54E32A361975 11/5/2011 2002 Mercedes-Benz ML $11,900.00 $7,060.75 59.3%

WBXPA73455WC49424 9/6/2011 2005 BMW X3 $16,400.00 $10,800.00 65.9%

1FAFP46V1WF177622 7/2/2011 1998 Ford Mustang $9,900.00 $5,500.00 55.6%

JN1CA21D7WT500657 6/4/2011 1998 Nissan Maxima $6,900.00 $3,680.00 53.3%

2GCEC19W821132683 3/18/2011 2002 Chevrolet Silverado 1500 $7,900.00 $5,500.00 69.6%

JT8BD68S4X0060023 4/11/2011 1999 Lexus GS $11,800.00 $5,730.00 48.6%

28KA43R16H416054 12/13/2011 2006 Dodge Charger $11,900.00 $7,950.77 66.8%

WBAAm3343YFP79893 3/31/2011 2000 BMW 3 Series $8,900.00 $5,149.39 57.9%

WBAXA73555B815676 4/4/2011 2005 BMW 5 Series $16,400.00 $9,000.00 54.9%

1GCEC14X17Z174286 4/7/2011 2007 Chevrolet Silverado $11,900.00 $7,000.00 58.8%

4JGAB72E41A265737 2/23/2011 2001 Mercedes-Benz ML $12,900.00 $6,800.00 52.7%

WBAAM5332XFR04559 4/2/2011 1999 BMW 3 Series $10,900.00 $4,922.25 45.2%

WDBRF64JXZE002046 2/12/2011 2002 Mercedes-Benz C Class $10,900.00 $10,300.00 94.5%
32

[*32]

19UCA56832A041388 1/24/2011 2002 Acura TL $9,900.00 $6,362.48 64.3%

JS1VT54A252100524 4/5/2011 2005 Suzuki SV1000 $8,900.00 $3,500.00 39.3%

2G1WE52E949161370 2/27/2011 2004 Chevrolet Impala $7,900.00 $3,000.00 38.0%

1GNEC13TZYJ128631 5/14/2011 2000 Chevrolet Tahoe $9,900.00 $6,469.66 65.4%

1GKEK13R2YR153099 2/20/2011 2000 GMC Yukon Denali $9,900.00 $7,825.00 79.0%

1FMRC15W03LC49959 1/23/2011 2003 Ford Expedition $10,900.00 $5,136.38 47.1%

1FMRU15W92LA97856 2/26/2011 2002 Ford Expedition $8,900.00 $4,149.18 46.6%

3GYEK63N72G212753 2/19/2011 2002 Cadillac Escalade $16,900.00 $9,800.00 58.0%

JHLRD1842XC012624 7/2/2011 1999 Honda CR-V $6,700.00 $3,000.00 44.8%

1GNDT13W5W2189117 8/20/2011 1998 Chevrolet Blazer $4,900.00 $1,500.00 30.6%

WAUJC68E93A206945 9/11/2011 2003 Audi A4 $10,900.00 $7,500.00 68.8%

2GCEC19V911278807 9/23/2011 2001 Chevrolet Silverado 1500 $10,400.00 $5,870.64 56.4%

2G1WB55K869169587 4/4/2011 2006 Chevrolet Impala $10,900.00 $6,925.00 63.5%

1GYEC63%74R10788610 1/6/2011 2004 Cadillac Escalade $17,900.00 $11,398.09 63.7%

2HNYD18862H543966 11/12/2011 2002 Acura MDX $9,900.00 $4,900.00 49.5%

1FMZU63E92ZC18759 8/18/2011 2002 Ford Explorer $10,900.00 $5,275.03 48.4%

1GNEC13V04R193673 11/3/2011 2004 Chevrolet Tahoe $13,900.00 $11,841.83 85.2%

1G8ZK52762Z178710 9/29/2011 2002 Saturn S-Series $4,900.00 $2,315.00 47.2%

WCBNG70J9VA069051 10/17/2011 2000 Mercedes Benz S Class $11,900.00 $5,700.00 47.9%

2GCEC19V7X1225015 11/6/2011 1999 Chevrolet Silverado 1500 $8,900.00 $4,500.00 50.6%

JT88F28G8W5014288 8/20/2011 1998 Lexus ES $5,900.00 $3,800.00 64.4%

10 Some VINs listed in RA Kaplan’s spreadsheets contain nonalphanumeric characters and/or more or fewer digits than 17. Those 

VINs are reproduced here although the Court believes them to contain transcription errors.
33

[*33]

3GTEC14X97G166310 6/11/2011 2007 GMC Sierra (Classic) $10,900.00 $6,580.00 60.4%

1GNEC13R0YR142375 11/27/2011 2000 Chevrolet Tahoe $4,900.00 $3,608.01 73.6%

2G1FP23G512134068 4/16/2011 2001 Chevrolet Camero $12,900.00 $7,300.00 56.6%

1GTEC19T8YZ138294 1/24/2011 2002 GMC Sierra 1500 Ext $10,900.00 $5,850.00 53.7%

1N4BL11E63C299096 9/18/2011 2003 Nissan Altima $10,900.00 $6,275.00 57.6%

1G1BL52P8TR180649 8/27/2011 1996 Chevrolet Impala $9,900.00 $4,800.00 48.5%

1D4GP24R16B711835 6/8/2011 2006 Dodge Grand Caravan $7,900.00 $5,425.00 68.7%

WBANA735X4B806051 1/27/2011 2004 BMW 5 Series $19,900.00 $14,341.43 72.1%

1GNEC138R4YR179994 1/8/2011 2000 Chevrolet Tahoe $12,900.00 $4,900.00 38.0%

3GNEC16TX3G117838 2/23/2011 2003 Chevrolet Suburban 1500 $11,900.00 $8,800.00 73.9%

1GKEC13R4VJ743022 5/13/2011 1997 GMC Yukon $7,499.00 $3,618.33 48.3%

3GYFK66N54G269052 2/14/2011 2004 Cadillac Escalade $16,500.00 $10,300.00 62.4%

1GYEK63N02R189302 2/5/2011 2002 Cadillac Escalade $18,900.00 $7,705.00 40.8%

WBABM5346VJP03324 12/8/2011 2000 BMW 3 Series $10,900.00 $5,823.10 53.4%

1GMDC23E83D237496 7/23/2011 2003 Pontiac Montana $7,900.00 $4,700.00 59.5%

JT8BH68X1Y0024159 8/25/2011 2000 Lexus GS $10,500.00 $5,775.00 55.0%

19UUA56672A021319 7/16/2011 2002 Acura TL $8,400.00 $5,800.00 69.0%

2GCEC19T821429281 5/15/2011 2002 Chevrolet Silverado 1500 $9,600.00 $5,066.74 52.8%

5FNRL18092B022673 2/6/2011 2002 Honda Odyssey $9,900.00 $5,225.00 52.8%

1GKFK66U02J214129 2/5/2011 2002 GMC Yukon XL 1500 $13,900.00 $8,431.87 60.7%

1G1ND521X1M565436 12/15/2011 2001 Chevrolet Malibu $5,900.00 $2,415.00 40.9%

1GKEK63R5YR207668 12/18/2011 2000 GMC Yukon Denali $7,900.00 $3,695.00 46.8%

WBAAN37461ND46851 10/15/2011 2001 BMW 3 Series $10,900.00 $4,378.17 40.2%
34

[*34]

1GYEK63N03R190841 8/4/2011 2003 Cadillac Escalade $14,900.00 $10,650.00 71.5%

1GNEC13T6Y1164939 7/30/2011 2000 Chevrolet Tahoe $9,900.00 $5,651.93 57.1%

BDBNG70J4YA107933 8/2/2011 2000 Mercedes Benz S Class $12,900.00 $8,290.22 64.3%

1FMZU63K73ZA54709 7/22/2011 2003 Ford Explorer $9,900.00 $5,100.00 51.5%

5UXFA53542LP56586 2/20/2011 2002 BMW X5 $15,225.00 $11,304.22 74.2%

WDBNG70J32A291057 1/8/2011 2002 Mercedes-Benz S Class $11,400.00 $5,700.00 50.0%

19UUA56612A015533 1/10/2011 2002 Acura TL $10,300.00 $6,759.99 65.6%

1GKEK66U41J241528 2/22/2011 2001 GMC Yukon XL 1500 $11,900.00 $6,831.17 57.4%

SALNY22263A226964 7/20/2011 2003 Land Rover Freelander $7,900.00 $3,815.92 48.3%

JN1CA21D7TT726385 12/5/2011 Nissan Maxima $4,900.00 $3,900.00 79.6%

1G6DM57N730119028 3/30/2011 2003 Cadillac CTS $9,900.00 $7,000.00 70.7%

1G6DM7NX30137409 3/18/2011 2003 Cadillac CTS $13,400.00 $8,688.33 64.8%

WDBNG70J92A252036 1/28/2011 2002 Mercedes-Benz S Class $14,900.00 $8,300.00 55.7%

2HKRL18501H589947 3/12/2011 2001 Honda Odyssey $9,900.00 $5,100.00 51.5%

1GKEC13T02R188787 8/10/2011 2002 GMC Yukon $8,900.00 $5,525.00 62.1%

3VWTG69M11M109824 11/15/2011 2001 Volkswagen Jetta $7,900.00 $3,565.00 45.1%

JT8BF12G3T0186014 7/2/2011 1996 Lexus ES $6,500.00 $3,300.00 50.8%

WDBGA76E1PA120187 8/12/2011 1993 Mercedes-Benz 600SEC $11,500.00 $6,500.00 56.5%

WP1A829P54LA70364 12/20/2011 2004 Porsche Cayenne $20,900.00 $15,950.00 76.3%

1GCEC14V02Z141416 7/24/2011 2002 Chevrolet Silverado 1500 $11,900.00 $6,208.43 52.2%

2HNYD18693H541371 3/13/2011 2003 Acura MDX $14,900.00 $12,000.00 80.5%

WBAGN63493DR09737 2/11/2011 2003 BMW 7 Series $20,400.00 $12,000.00 58.8%

 Total (or Average) $2,139,642.33 $1,224,592.71

56.4% 

(Average)
35

APPENDIX B – 2012

VIN

Date of 

Sale Car Sales Price COGS

COGS 

Margin

1GKDT135832197556 12/29/2012 2003 GMC Envoy $7,900.00 $5,500.00 69.6%

1G1NE52J016172210 12/22/2012 2001 Chevrolet Malibu $4,900.00 $3,500.00 71.4%

1HGEM225031028044 6/2/2012 2003 Honda Civic $10,700.00 $6,000.00 56.1%

WBAFA535711M87951 8/26/2012 2001 BMW X5 $11,900.00 $5,000.00 42.0%

1LNHM87A64Y665346 8/31/2012 2004 Lincoln LS $7,900.00 $5,262.31 66.6%

1GCEC1417YZ109957 3/4/2012 2000 Chevrolet Silverado 1500 $8,900.00 $3,600.00 40.4%

JNKAY41E73M002256 3/8/2012 2003 Infiniti $11,900.00 $6,175.00 51.9%

JT81Z31C4P0011743 3/28/2012 1993 Lexus SC $5,900.00 $1,500.00 25.4%

1GND5135532321711 3/4/2012 2003 Trail Blazer $7,300.00 $5,375.00 73.6%

WDBNG70391A176803 2/23/2012 2001 Mercedes-Benz C Class $10,900.00 $6,908.30 63.4%

WBAAV53421J593586 1/7/2012 2001 BMW 3 Series $8,900.00 $4,887.57 54.9%

1N4AL11D95C266597 5/13/2012 2005 Nissan Altima $10,900.00 $6,890.20 63.2%

1GKFK66U551255086 5/11/2012 2005 GMC Yukon XL 1500 $16,400.00 $11,500.00 70.1%

WBADT43471GF7530 6/30/2012 2001 BMW 5 Series $9,900.00 $5,040.00 50.9%

5TDZT38A215053956 12/24/2012 2001 Toyota Sequoia $10,900.00 $5,600.00 51.4%

1FMDU65W94ZA52519 11/20/2012 2004 Ford Explorer $11,900.00 $6,377.93 53.6%

4JGAB72E41A265737 8/29/2012 2001 Mercedes-Benz ML Class $11,900.00 $6,266.11 52.7%

1GTEK9T0XZ533846 7/24/2012 1999 GMC Sierra 1500 Extend $9,900.00 $4,840.00 48.9%

1GCCS19W3Y8149987 6/2/2012 2000 Chevrolet S10 Ext. Cab $6,900.00 $2,400.00 34.8%

1GCCS19W02852176 12/2/2012 2002 Chevrolet S10 Ext. Cab $9,400.00 $4,700.00 50.0%

JT88F22G6V0033300 4/1/2012 1997 Lexus ES $9,900.00 $5,840.00 59.0%

[*35]
36

[*36]

1B7GG2A2515109577 5/27/2012 2001 Dodge Dakota Quad Cab $5,900.00 $4,980.00 84.4%

WDBNG705YA029033 3/20/2012 2000 Mercedes-Benz S Class $10,900.00 $4,911.28 45.1%

WBADT43421GX22705 3/20/2012 2001 BMW 5 Series $10,900.00 $5,516.65 50.6%

4A3AA46G01E049505 7/5/2012 2001 Mitsubishi Galant $5,900.00 $2,200.00 37.3%

1TJGF10U630161797 12/22/2012 2003 Lexus RX $11,900.00 $7,500.00 63.0%

WVWPD6381eP272622 12/17/2012 2003 Volkswagen Passat $7,900.00 $2,400.00 30.4%

WDBPJ75J02A020282 11/27/2012 2002 Mercedes Benz CL Class $7,500.00 $7,000.00 93.3%

2GCEC19V921108786 11/12/2012 2002 Chevrolet Silverado 1500 $7,900.00 $6,640.00 84.1%

SAJEA51D23XD53602 9/8/2012 2003 Jaguar X-Type $7,900.00 $3,973.76 50.3%

1GCCS19W118196909 5/10/2012 2001 Chevrolet S10 Ext. Cab $10,900.00 $5,600.00 51.4%

2GCED19W421375519 8/4/2012 2002 Chevrolet Silverado 1500 $8,900.00 $5,040.00 56.6%

WDBJF55F8%J006266 8/7/2012 1996 Mercedes Benz E Class $3,000.00 $3,300.00 110.0%

WP1AB29P924LA76684 6/3/2012 2004 Porsche Cayenne $18,900.00 $16,000.00 84.7%

1N4BL11D43C250115 5/26/2012 2003 Nissan Altima $10,900.00 $5,430.56 49.8%

WDBRF64J13F308855 3/14/2012 2003 Mercedes Benz C Class $11,900.00 $5,900.00 49.6%

1NXBR32EX32131423 3/8/2012 2003 Toyota Corolla $8,900.00 $5,775.00 64.9%

3VWRC29M7XM058806 2/10/2012 1999 Volkswagen Jetta $6,500.00 $3,300.00 50.8%

1TLKT324950214885 2/10/2012 2005 Scion $10,900.00 $6,875.00 63.1%

WBAEV53453KM27991 3/30/2012 2003 BMW 3 Series $8,900.00 $771.42 8.7%

1GNC513WSY2121580 5/18/2012 2000 Chevrolet Blazer $5,900.00 $1,520.00 25.8%

1GYEK1388VR159950 5/11/2012 2000 Cadillac Escalade $8,900.00 $3,395.00 38.1%

1G2WK52142F134604 8/5/2012 2002 Pontiac Grand Prix $8,900.00 $2,225.00 25.0%

WBAAM5332XFR08501 5/26/2012 1999 BMW 3 Series $9,900.00 $4,272.30 43.2%
37

[*37]

WBADM6348XGU02578 9/7/2012 1999 BMW 5 Series $6,900.00 $2,500.00 36.2%

JT8UF11E680198059 12/30/2012 1994 Lexus LS $9,900.00 $499.30 5.0%

1FMBU17L611829745 2/1/2012 2001 Ford Expedition $8,900.00 $4,545.00 51.1%

1FAFP34322W260174 11/22/2012 2002 Ford Focus $6,900.00 $2,810.00 40.7%

2T1CE22PG32023068 9/11/2012 2003 Toyota Solara $8,900.00 $4,025.00 45.2%

JT88H68X1Yoo24159 10/3/2012 2000 Lexus GS $8,900.00 $5,990.00 67.3%

WBADT63491CF05951 9/5/2012 2001 BMW 5 Series $9,900.00 $3,995.00 40.4%

1GNEC13T71J108448 8/13/2012 2001 Chevrolet Tahoe $8,900.00 $6,000.00 67.4%

2C4GM68465R367995 1/18/2012 2005 Chrystler Pacifica $10,900.00 $5,179.04 47.5%

WDBJF55F6VJ030620 3/26/2012 1997 Mercedes Benz E Class $7,900.00 $4,900.00 62.0%

2A8GM68X47R145042 2/16/2012 2007 Chrystler Pacifica $12,900.00 $7,605.00 59.0%

WDB8F405A562092 4/20/2012 2004 Mercedez Benz C Class $12,900.00 $8,240.00 63.9%

3VWSK69M85M015357 9/23/2012 2005 Volkswagen Jetta $10,900.00 $5,140.00 47.2%

1GTEC14V522229605 8/16/2012 2002 GMC Sierra 1500 Reg. Cab $10,900.00 $5,000.00 45.9%

WBAEV33442P055030 1/28/2012 2002 BMW 3 Series $7,500.00 $4,900.00 65.3%

1GCEK19%E1E107728 3/13/2012 2001 Chevrolet Silverado 1500 $9,500.00 $4,000.00 42.1%

3VWBK21C31M469988 3/23/2012 2001 Volkswagen Beetle $7,900.00 $4,400.00 55.7%

WBAMA735748059251 2/20/2012 2004 BMW 5 Series $16,900.00 $10,995.00 65.1%

WDBRF61J33A536406 9/20/2012 2003 Mercedes Benz C Class $10,900.00 $6,946.57 63.7%

WAUJC68E45A119800 11/20/2012 2005 Audi A4 $9,900.00 $5,500.00 55.6%

2HKRL18982H523148 9/14/2012 2002 Honda Odyssey $10,100.00 $4,840.00 47.9%

2G1WT58K779164147 2/4/2012 2007 Chevrolet Impala $8,900.00 $3,610.43 40.6%

1GKES16S346151663 2/13/2012 2004 GMC Envoy XL $10,000.00 $4,645.00 46.5%
38

[*38]

1FMZU63W532A53447 1/4/2012 2003 Ford Explorer $10,900.00 $5,700.00 52.3%

WBAAM3341YCA89810 3/14/2012 2000 BMW 3 Series $8,600.00 $5,300.00 61.6%

JTHBD182910003343 2/17/2012 2001 Lexus IS $9,900.00 $5,940.00 60.0%

JT88D68S9W0026609 5/16/2012 1998 Lexus GS 300 $9,900.00 $3,725.00 37.6%

WDBRF64J62E005008 1/24/2012 2002 Mercedez Benz C Class $10,900.00 $5,509.11 50.5%

WDBNF7019YA033881 12/23/2012 2000 Mercedes-Benz S Class $11,900.00 $6,140.00 51.6%

5FNRL18693B016619 10/30/2012 2003 Honda Odyssey $10,900.00 $6,017.35 55.2%

1LNHM8653YY602589 10/26/2012 2000 Lincoln LS $6,900.00 $3,500.00 50.7%

1HGCM72644A002945 11/3/2012 2004 Honda Accord $8,900.00 $4,810.90 54.1%

1GNEK13T51R158818 9/30/2012 2001 Chevrolet Tahoe $8,500.00 $4,940.00 58.1%

WBADT43452G644699 8/13/2012 2002 BMW 5 Series $9,900.00 $4,300.00 43.4%

2CGCEK19T3Y1287241 7/1/2012 2000 Chevrolet Silverado 1500 $7,400.00 $5,097.95 68.9%

5J6YH18573L010748 6/11/2012 2003 Honda Element $11,000.00 $8,469.20 77.0%

1GCEC14XX27142557 2/4/2012 2002 Chevrolet Silverado 1500 $9,900.00 $4,800.00 48.5%

2G1WJ115K779402999 11/24/2012 2007 Chevrolet Monte Carlo $3,900.00 $2,800.00 71.8%

1FAFP33P82W225238 8/12/2012 2002 Ford Focus $5,400.00 $5,900.00 109.3%

WDBNG70J52A299256 8/20/2012 2002 Mercedez Benz C Class $11,400.00 $6,827.81 59.9%

1G6EL12Y8XU614791 5/7/2012 1999 Cadillac Eldorado $7,400.00 $3,600.00 48.6%

4T1BF22K9XU086814 2/11/2012 1999 Toyota Camry $7,900.00 $2,885.00 36.5%

JT8UF11E1N0109766 3/16/2012 1992 Lexus LS $4,900.00 $2,000.00 40.8%

2G1WX15K429290606 10/7/2012 2002 Chevrolet Monte Carlo $6,900.00 $2,615.00 37.9%

1GCCS146268270580 3/30/2012 2006 Chevrolet Colorado Reg. $3,000.00 $3,995.00 133.2%

1GNEC13T64R194583 1/23/2012 2004 Chevrolet Tahoe $9,900.00 $6,340.00 64.0%
39

[*39]

5UXFA53573LV97077 9/6/2012 2003 BMW X5 $12,900.00 $6,140.00 47.6%

1FMFU19525LA69115 12/2/2012 2005 Ford Expedition $11,900.00 $4,600.00 38.7%

JN1DA31A52T307353 5/28/2012 2002 Nissan Maxima $9,900.00 $5,400.00 54.5%

WDBNG7512YA040242 7/27/2012 2000 Mercedes-Benz S Class $12,900.00 $5,745.28 44.5%

1N4AL11032C202504 7/29/2012 2002 Nissan Altima $8,900.00 $6,000.00 67.4%

1FMYU02144KB06454 9/8/2012 2004 Ford Escape $5,900.00 $4,200.00 71.2%

WBAAM3349YFP72673 6/9/2012 2000 BMW 3 Series $9,900.00 $5,100.00 51.5%

1ZVFT84N775215746 4/7/2012 2007 Ford Mustang $14,900.00 $10,650.91 71.5%

1GNEC13T04R111391 2/5/2012 2004 Chevrolet Tahoe $12,900.00 $7,904.48 61.3%

1GYEK13R8YR159950 8/20/2012 2002 Cadillac Escalade $9,400.00 $3,395.00 36.1%

YV1R5G1R012044405 11/23/2012 2001 Volvo S60 $7,800.00 $3,300.00 42.3%

JT2EL55D050019620 2/17/2012 1995 Toyota Tercel $3,900.00 $1,850.00 47.4%

1LNHM87A73Y668898 6/17/2012 2003 Lincoln LS $10,900.00 $6,912.90 63.4%

WBADT43413G031457 11/20/2012 2003 BMW 5 Series $11,300.00 $6,340.00 56.1%

JT8CH32Y3T0050758 12/11/2012 1996 Lexus SC $5,900.00 $1,800.00 30.5%

JTEDW21AU70022671 12/16/2012 2007 Toyota Highlander $12,900.00 $8,000.00 62.0%

1FMRU15L13LA38727 7/10/2012 2003 Ford Expedition $11,750.00 $6,500.00 55.3%

WDBL165G4WF034448 6/18/2012 1998 Mecerdes Benz CLK $6,900.00 $4,000.00 58.0%

1FMFU18L73LB23425 6/23/2012 2003 Ford Expedition $10,900.00 $6,340.00 58.2%

JT88H68XeY0024577 3/31/2023 2000 Lexus GS $8,900.00 $6,625.00 74.4%

1FMYU01111KA70431 1/20/2012 2001 Ford Escape $4,500.00 $4,000.00 88.9%

1G6EL12Y8XU614791 4/1/2012 1999 Cadillac Eldorado $7,900.00 $3,600.00 45.6%

JT2BF28K0Y0251324 1/20/2012 2000 Toyota Camry $7,900.00 $3,595.00 45.5%
40

[*40]

1GCEK19T61E220105 12/27/2012 2001 Chevrolet Silverado 1500 $8,900.00 $3,500.00 39.3%

1GKES165636145838 4/23/2012 2003 GMC Envoy $10,900.00 $6,524.00 59.9%

2HGES26782H521810 7/29/2012 2002 Honda Civic $9,400.00 $5,045.00 53.7%

2T1CG22P4YC345600 1/11/2012 2000 Toyota Solara $7,400.00 $4,550.00 61.5%

JN8A208T93W109670 1/8/2012 2003 Nissan Murano $11,800.00 $7,300.00 61.9%

1GCEK19T3YE336162 12/16/2012 2000 Chevrolet Silverado 1500 $9,700.00 $5,000.00 51.5%

3GKFK16T9YG118698 7/2/2012 2000 GMC Yukon XL 1500 $8,900.00 $3,625.00 40.7%

WBAEV3312KL77125 12/16/2012 2002 BMW 3 Series $9,900.00 $4,739.45 47.9%

1GKFK66U913198787 12/17/2012 2001 GMC Yukon XL 1500 $11,900.00 $6,500.00 54.6%

2B3KA43RX7H606999 11/15/2012 2007 Dodge Charger $15,900.00 $10,500.00 66.0%

JT8BD6850X0063744 10/14/2012 1999 Lexus GS $9,500.00 $4,440.00 46.7%

1FMRU17W23LC31802 6/27/2012 2003 Ford Exposition $12,900.00 $6,540.00 50.7%

WBAAM3346YCA89897 4/21/2012 2000 BMW 3 Series $10,500.00 $5,445.00 51.9%

WBAGJ8325WDM15370 8/31/2012 1998 BMW 7 Series $6,900.00 $3,750.00 54.3%

WDBDA68FSXF174512 2/23/2012 1999 Mercedes Benz SL Class $11,900.00 $7,603.23 63.9%

KNDUP132856713927 2/11/2012 2005 Kia Sedona $7,900.00 $5,800.00 73.4%

1GKFK66U93J164822 9/19/2012 2003 GMC Yukon XL 1500 $11,700.00 $5,700.00 48.7%

1LNHM86S93Y698575 4/1/2012 2003 Lincoln LS $9,900.00 $4,125.00 41.7%

2G2FV32G822163170 4/28/2012 2002 Pontiac Firebird $10,900.00 $6,275.00 57.6%

1FMZU65W42ZC45793 4/8/2012 2002 Ford Explorer $7,900.00 $3,400.00 43.0%

SALME114X4A175892 4/3/2012 2004 Land Rover Range Rover $17,900.00 $13,265.00 74.1%

JT1GF10U81016619 7/4/2012 2001 Lexus RX $10,900.00 $5,980.28 54.9%

2GIWF52E419291567 1/27/2012 2001 Chevrolet Impala $3,000.00 $3,065.00 102.2%
41

[*41]

3VWRK69M83M121173 1/1/2012 2003 Volkswagen Jetta $7,900.00 $3,400.00 43.0%

1GCCS1441X8206708 3/12/2012

1999 Chevrolet S10 Regular

Cab $6,900.00 $2,915.00 42.2%

2B3LA43G47H636812 2/24/2012 2007 Dodge Charger $12,900.00 $8,205.00 63.6%

1FMYU01111KA70431 6/12/2012 2001 Ford Escape $5,900.00 $4,000.00 67.8%

1GNEC3TS1R154099 12/23/2012 2001 Chevrolet Tahoe $11,900.00 $6,000.00 50.4%

2G1WB58KD69161673 9/29/2012 2006 Chevrolet Imapal $8,900.00 $3,700.00 41.6%

2HKRL18602H522999 12/17/2012 2002 Honda Odyssey $10,900.00 $5,400.00 49.5%

1GTEC19VD5Z120496 11/20/2012 2005 GMC Sierra 1500 Ext. Cab $12,400.00 $4,500.00 36.3%

19UYA42673A005785 8/23/2012 2003 Acura CL $7,900.00 $5,000.00 63.3%

19UUA56903A013042 8/27/2012 2003 Acura IL $9,900.00 $4,600.00 46.5%

WAULC68E52A047672 7/28/2012 Audi A4 $9,050.00 $5,840.00 64.5%

WDBNG70J12A234596 6/30/2012 2002 Mercedes Benz S Class $12,900.00 $9,000.00 69.8%

1D4GP24R17B244031 5/19/2012 2007 Dodge Grand Caravan $6,900.00 $4,545.00 65.9%

1FMCU03172KD66885 1/15/2012 2002 Ford Escape $9,650.00 $4,711.81 48.8%

WBAFA53541LM72632 9/12/2012 2001 BMW X5 $11,900.00 $6,350.00 53.4%

JTHBF30G625031425 10/31/2012 2002 Lexus ES $7,500.00 $7,137.69 95.2%

1GKFK66UDLH88004 8/18/2012 2001 GMC Yukon XL 1500 $8,900.00 $6,044.03 67.9%

1DrHD38K65F506843 5/24/2012 2005 Dodge Duragno $10,900.00 $4,868.31 44.7%

1FAHP3439VW257533 4/15/2012 2000 Ford Focus $5,900.00 $4,000.00 67.8%

SAJEA01U63HM53146 3/18/2012 2003 Jaguar S-Type $10,900.00 $7,179.97 65.9%

WDB1F65H1XA814293 2/7/2012 1999 Mercedes Benz E Class $6,900.00 $4,000.00 58.0%

2T1CG22P1YC321366 5/17/2012 2000 Toyota $6,900.00 $3,150.00 45.7%

2C8GM68424R633431 11/13/2012 2004 Chrysler Pacifica $9,400.00 $5,740.00 61.1%
42

[*42]

3VWBC21C4YM452169 9/25/2012 2000 Volkswagon Beetle $6,900.00 $2,300.00 33.3%

SALNE22274A296497 5/29/2012 2004 Land Rover Freelander $7,700.00 $3,725.00 48.4%

WBABM3348YJN85314 4/12/2012 2000 BMW 3 Series $8,900.00 $5,000.00 56.2%

JTJHF100210195012 4/9/2012 2001 Lexus RX $10,400.00 $6,500.00 62.5%

WAUED2809XA208487 3/15/2012 1999 Audi A4 $6,900.00 $3,600.00 52.2%

JTJHF100110230915 3/11/2012 2001 Lexus RX $12,400.00 $7,200.00 58.1%

JN8AZ08T24W221955 3/3/2012 2004 Nissan Murano $9,400.00 $7,797.80 83.0%

1LNHM865S12Y705369 1/25/2012 2002 Lincoln LS $4,600.00 $3,357.00 73.0%

5LMFL2567LJ14259 1/17/2012 2007 Lincoln Navigator L $25,150.00 $19,125.49 76.0%

1GYDE637X40138966 4/19/2012 2004 Cadillac SRX $12,700.00 $6,152.70 48.4%

3VWTH69M13M038799 9/14/2012 2003 Volkswagen Jetta $9,400.00 $3,695.00 39.3%

2B3KA43R06H390658 9/13/2012 2006 Dodge Charger $11,900.00 $5,500.00 46.2%

1GCCS145018151314 9/30/2012 2001 Chevrolet S10 Reg. Cab $7,500.00 $2,493.77 33.3%

1GCCS19W0Y8105302 11/4/2012 2000 Chevrolet S10 Ext. Cab $6,400.00 $2,210.00 34.5%

1GCCS19W818156438 8/12/2012 2001 Chevrolet S10 Ext. Cab $9,900.00 $4,840.00 48.9%

1GCEC14X232231511 3/29/2012 2003 Chevrolet Silverado 1500 $10,900.00 $6,475.00 59.4%

SFNRL180738086678 5/19/2012 2003 Honda Odyssey $7,300.00 $5,540.00 75.9%

1D4HD48D84F216710 2/2/2012 2004 Dodge Durango $12,900.00 $6,900.00 53.5%

2D4GP44L17R175057 2/19/2012 2007 Dodge Grand Caravan $8,900.00 $4,500.00 50.6%

JT8BF22GXV0029797 1/29/2012 1997 Lexus ES $7,900.00 $4,295.00 54.4%

1G1ZH57B69F149455 4/3/2012 2009 Chevrolet Malibu $13,500.00 $10,000.00 74.1%

4T3ZF13C2WU010017 5/13/2012 1998 Toyota Sienna $8,900.00 $3,000.00 33.7%

1FMDU65W52ZA89029 7/7/2012 2002 Ford Explorer $9,900.00 $3,100.94 31.3%
43

[*43]

WDBNG7S151A211944 11/29/2012 2001 Mercedes Benz S Class $11,900.00 $4,240.00 35.6%

1FAFP53U91G121593 12/22/2012 2001 Ford Taurus $3,999.00 $2,000.00 50.0%

JTGHF10U0X0035004 11/12/2012 1999 Lexus RX $9,900.00 $5,000.00 50.5%

1N4AL11D65C129830 5/27/2012 2005 Nissan Altima $9,500.00 $6,020.00 63.4%

SAL1V124XXA562312 2/4/2012 1999 Land Rover Discovery $6,900.00 $2,430.03 35.2%

2CNDL73F156090514 5/6/2012 2005 Chevrolet Equinox $10,295.00 $4,438.25 43.1%

JT8UF11ESM0094834 11/10/2012 1991 Lexus LS $5,900.00 $2,892.83 49.0%

JN1CA31D1Yt509833 10/16/2012 2000 Nissan Maxima $4,000.00 $2,595.00 64.9%

1YVFP84DX45N84864 9/26/2012 2004 Mazda 6 $10,900.00 $4,440.00 40.7%

1G1YY0781F5101589 7/31/2012 1985 Chevrolet Corvette $2,900.00 $4,000.00 137.9%

1GNEC16T421334654 6/7/2012 2002 Chevrolet Suburban 1500 $8,900.00 $3,325.00 37.4%

WDBRF64J61F04792 7/25/2012 2001 Mercedes Benz C Class $11,900.00 $6,375.00 53.6%

WBAG163452DP54799 10/5/2012 2002 BMW 7 Series $15,900.00 $8,649.19 54.4%

5TDZT38A925079780 10/21/2012 2002 Toyota Sequoia $10,900.00 $5,545.00 50.9%

1GCEC14T5XZ113066 6/5/2012 1999 Chevrolet Silverado 1500 $7,700.00 $4,550.98 59.1%

2GCEC19V921328610 5/23/2012 2002 Chevrolet Silverado 1500 $8,900.00 $4,900.00 55.1%

3GNDA13D375543081 3/16/2012 2007 Chevrolet HHR $8,900.00 $4,200.00 47.2%

3VWRC29M1YM115793 2/15/2012 2000 Volkswagen Jetta $6,900.00 $3,000.00 43.5%

WDBRF61JX1F069131 4/14/2012 2001 Mercedes Benz C Class $9,900.00 $5,800.00 58.6%

2G1WH55K449255183 2/26/2012 2004 Chevrolet Impala $9,900.00 $4,345.00 43.9%

YU1RS61R712059371 12/5/2012 2001 Volvo S60 $7,900.00 $2,000.00 25.3%

WDBNG75J7YA066299 5/19/2012 2000 Mercedes-Benz S Class $10,900.00 $3,300.00 30.3%

WDBLJ65GGXF098699 9/21/2012 1999 Mercedes Benz CLK Class $7,900.00 $3,115.00 39.4%
44

[*44]

1FMFU18L73LB25160 7/23/2012 2003 Ford Explorer $11,900.00 $5,840.00 49.1%

2G1WX15K349242890 6/12/2012 2004 Chevrolet Monte Carlo $3,900.00 $2,800.00 71.8%

1GKFK66U41J174459 6/6/2017 2001 GMC Yukon XL 1500 $10,900.00 $5,490.00 50.4%

1N4BL11D02C707419 5/3/2012 2002 Nissan Altima $9,700.00 $6,267.50 64.6%

WDBRF61J83A480625 3/3/2012 2003 Mercedes Benz C Class $10,900.00 $5,975.00 54.8%

2HKRL1861YH613675 10/27/2012 2000 Honda Odyssey $10,900.00 $8,500.00 78.0%

1GNEC13T81R111389 9/2/2012 2001 Chevrolet Tahoe $8,900.00 $4,500.00 50.6%

JT8UZ30C150040723 5/4/2012 1995 Lexus SC $5,500.00 $2,095.00 38.1%

YV1R553D212058074 8/23/2012 2001 Volvo 560 $9,300.00 $4,165.70 44.8%

1GKEK13R8WJ710836 7/28/2012 1998 GMC Yukon $6,900.00 $1,550.00 22.5%

JT8GK13T150100226 11/20/2012 1995 Lexus ES $7,900.00 $2,410.00 30.5%

3VWSD29M61M030839 6/14/2012 2001 Volkswagen Jetta $6,500.00 $3,995.00 61.5%

1FAFP53U91G121593 8/16/2012 2001 Ford Taurus $6,900.00 $2,544.71 36.9%

KNDJD733735051400 8/1/2012 2003 Kia Sorento $9,900.00 $5,861.27 59.2%

WBAAM3346YCB24891 4/2/2012 2000 BMW 3 Series $7,500.00 $5,000.00 66.7%

WBAAV334X1FU85345 6/29/2012 2001 BMW 3 Series $5,900.00 $3,395.00 57.5%

1HGCG22431A035567 7/2/2012 2001 Honda Accord $7,900.00 $4,540.00 57.5%

19UUA56652A036028 6/7/2012 2002 Acura TL $8,700.00 $3,615.00 41.6%

3VWSA69M35M014510 3/3/2012 2005 Volkswagen Jetta $9,900.00 $4,700.00 47.5%

JN8DR09X71W568112 4/22/2012 2001 Nissan Pathfinder $8,900.00 $4,300.00 48.3%

1GYEK13R3XR418195 4/14/2012 1999 Cadillac Escalade $8,900.00 $4,065.00 45.7%

SAJPD1845XC871938 4/14/2012 1999 Jaguar XJ Series $7,000.00 $6,146.22 87.8%

WVWMD23B6YP301860 4/15/2012 2000 Volkswagen Passat $5,900.00 $3,500.00 59.3%
45

[*45]

JT2EL55D050019620 2/20/2012 1995 Toyota Tercel $3,400.00 $1,850.00 54.4%

2GCEC19T321239565 2/25/2012 2002 Chevrolet Silverado 1500 $8,900.00 $5,475.00 61.5%

JHMBB6247XC004043 2/17/2012 1999 Honda Prelude $8,000.00 $4,887.19 61.1%

WFMDA516X5BA51814 2/4/2012 2005 Ford Freestar $7,900.00 $2,854.18 36.1%

1GMES165846172768 11/26/2012 2004 Chevrolet Trailblazer $11,900.00 $5,640.00 47.4%

WAUJC68E64A144955 9/13/2012 2004 Audi A4 $12,900.00 $5,240.00 40.6%

1GTEC19TSYZ160995 7/23/2012 2000 GMC Sierra 1500 Ext $9,400.00 $4,840.00 51.5%

JT88068S7Y0100953 3/21/2012 2000 Lexus GS $11,900.00 $5,700.00 47.9%

WBADT43432GZ97212 6/2/2012 2002 BMW 5 Series $10,900.00 $4,240.00 38.9%

JTHFN48Y020031361 6/18/2012 2002 Lexus CS $12,900.00 $8,805.57 68.3%

5UXFA53592LP48001 4/16/2012 2002 BMW X5 $15,900.00 $11,051.40 69.5%

1FMFU18516LA28588 3/14/2012 2006 Ford Exposition $17,650.00 $7,301.18 41.4%

2G1WF52E659145676 2/14/2012 2005 Chevrolet Impala $8,400.00 $4,511.71 53.7%

1B3ES26CX2D556763 9/28/2012 2002 Dodge Neon $6,900.00 $1,695.00 24.6%

2GCECL19TX11385038 7/22/2012 2001 Chevrolet Silverado 1500 $8,900.00 $3,595.00 40.4%

1GCEK19TS1E159832 8/1/2012 2001 Chevrolet Silverado 1500 $10,000.00 $4,882.00 48.8%

 Total (or Average) $2,298,644.00 $1,238,416.00

54.2% 

(Average)