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maintain or produce adequate books and records, the Commissioner is
authorized to compute the taxpayer's taxable income by any method
that clearly reflects income. Sec. 446(b); Holland v. United
States, 348 U.S. 121 (1954); Webb v. Commissioner, 394 F.2d 366,
371-372 (5th Cir. 1968), affg. T.C. Memo. 1966-81. The
reconstruction of income need only be reasonable in light of all
surrounding facts and circumstances. Giddio v. Commissioner, 54
T.C. 1530, 1533 (1970); Schroeder v. Commissioner, 40 T.C. 30, 33
(1963). The Commissioner is given latitude in determining which
method of reconstruction to apply when a taxpayer fails to maintain
records. Petzoldt v. Commissioner, 92 T.C. 661, 693 (1989).
For the years under consideration herein, petitioner
maintained inadequate books and records. As a result, respondent
was required primarily to use the bank deposit method to
reconstruct petitioners' income. "The bank deposit method assumes
that all money deposited in a taxpayer's bank account during a
given period constitutes taxable income." DiLeo v. Commissioner,
96 T.C. at 868. Bank deposits are prima facie evidence of income.
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986); Estate of Mason v.
Commissioner, 64 T.C. 651, 656 (1975), affd. 566 F.2d 2 (6th Cir.
1977). In analyzing a bank deposits case, deposits are considered
income when there is no evidence that they represent anything other
than income. Price v. United States, 335 F.2d 671, 677 (5th Cir.
1964); United States v. Doyle, 234 F.2d 788, 793 (7th Cir. 1956).
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