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other documents, such as real estate closing statements, to
identify income from real estate commissions, rents, refunds, and
other sources. The agents concluded that petitioners had income
in 1987 from petitioner husband's use of the Earl Kiem
Bell/Shores escrow account to pay petitioners' personal living
expenses.
11. Petitioners' Unreported Income
Petitioners had unreported income of $35,566 in 1987,
$87,711 in 1988, and $30,475 in 1989.
Petitioners had gains from real estate sales of $5,595 for
1987, and losses of $19,759 for 1988 and $832 for 1989. They had
net gains of $5,595 for 1987, and net losses of $19,759 for 1988
and $520 for 1989.
Petitioners underreported their capital loss by $12,080 in
1987 and overreported capital gain by $12,377 in 1988. They had
a net loss of $63,165 in 1987 and a net gain of $474 in 1988,
excluding capital gain from the sale of their interests in the
Bagnasco-Tabbi Funeral Home and Americana.
OPINION
1. Respondent's Use of the Bank Deposits Method
Respondent used the bank deposits plus expenditures method
to determine petitioner's income for the years in issue.7 If a
7 Respondent determined petitioners' income from the escrow
account by computing disbursements as income less any funds
petitioner husband deposited in the account.
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