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contend that the $14,000 is composed of two loans and as such is
not taxable under section 61. Respondent contends the $14,000
constitutes unreported taxable income and that petitioners have
failed to carry their burden of proving the determination
inaccurate.
Respondent determined the unreported income using the bank
deposits method. The use of the bank deposits method for
computing income has been authorized by the courts for many
years. DiLeo v. Commissioner, 96 T.C. 858 (1991), affd. 959 F.2d
16 (2d Cir. 1992); Estate of Mason v. Commissioner, 64 T.C. 651,
656 (1975), affd. 566 F.2d 2 (6th Cir. 1977). Bank deposits are
prima facie evidence of income. Tokarski v. Commissioner, 87
T.C. 74, 77 (1986); Estate of Mason v. Commissioner, supra at
656. In analyzing a bank deposits case, deposits will be
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); Harlan v. Commissioner, T.C. Memo. 1995-309.
The burden, generally, is on the taxpayers to show that the bank
deposits were derived from nontaxable sources. Rule 142(a);
Reaves v. Commissioner, 31 T.C. 690, 718 (1958), affd. 295 F.2d
336 (5th Cir. 1961); Romer v. Commissioner, 28 T.C. 1228, 1244
(1957).
Here, the use of the bank deposits method by respondent was
necessitated because petitioners lacked financial records for the
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