"You are making assumptions. You don't know," says Shea.
"Correct. I don't know," replies Schuch.
Shea says Bernard comfortable dealing with large sums of cash.
Shea driving home point that with her method, Schuch is doing best she can but it is not a precise method and she has to allow for possibility that she has nogt captured all tax items.
"You don't know do you?" says Shea.
Schuch says based on her investigation this is what she knows. "I'm am not aware of every financial transaction he (Bernard) had," admits Schuch.
Shea discussing a hypothetical loan in 2003 that could have been paid off in 2004 that Schuch might not have known about.
Schuch admits she might not have known that.
"I guess it is a possibility," says Schuch.
9:45AM Schuch says she used same methods for 2006 that she used in 2004.
Schuch says that in 2006 it did not appear that Kilpatrick had any additional income that should have been reported. Apparently he withdrew more than he put in that year.
Shea saying that bank deposit method not a specific and accurate way to calculate and that it can yield inaccurate results.
Schuch says there is a limitation to cash that you can deduct. She says that in 2006 he withdrew far more cash than the $50,000 he deposited.
Shea referencing Bernard's love of gambling. Saying he doesn't always lose and even when he does, maybe he still has some cash left over and could deposit that cash.
Schuch says Bernard typically lost at casinos and deposits did not coincide with any possible winnings.
Talking about money spent at Tunnel Liquors buying lottery tickets and "sundries."
Shea says Schuch saw lots of cash deposits and they weren't always in nice, round numbers.
Schuch says typically Kilpatrick's deposits were $5,000 to $9,0000.
Moving on to tax year 2005. Shea says much easier for IRS agent to calculate particularly because of the disbursement amounts from the employee profit sharing plan.
Shea says there is clearly an understatement on the 2005 returns. But Shea says, it has to be a willful deceit to be criminal.
Shea says disbursements were not business income. Schuch agrees they were not business income and should have been reported on forms 1099. Schuch says those are annual statements filed by taxpayers.
Shea says Alan Young and Cassandra Jones are the ones who prepared the tax returns. Schuch says but they were not aware of the disbursements.
Shea says but they knew he was of retirement age and eligible for rollover disbursements.
Schuch says but they were relying on their client to provide them all the information to prepare his tax return.
Shea says but $100,000 of the $280,000 flowed through his business account so the return preparers would have known about it.