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taxpayer does not maintain adequate books and records, respondent
may reconstruct a taxpayer's income by any reasonable method
which clearly reflects income. Sec. 446; Holland v. United
States, 348 U.S. 121, 130-132 (1954). The bank deposits method
has long been approved by the courts as a method for computing
income. 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
656-657.8
Respondent's determination is presumed to be correct, and
petitioners bear the burden of proving otherwise. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioners must
overcome the presumption as to each item of unreported income in
respondent's deficiency determination. Foster v. Commissioner,
391 F.2d 727, 735 (4th Cir. 1968), affg. in part, revg. in part
on other grounds T.C. Memo. 1965-246.
Petitioners argue that respondent erred in including in
their income for 1987: $11,502 from Americana's bank account,
$23,6159 from petitioner husband's use of the Earl Kiem escrow
8 Respondent concedes that petitioners are not liable for
tax on other income items of $100 for 1987 and $144 for 1988.
9 Respondent calculated that petitioners had taxable income
of $23,615 from their personal use of funds in the Earl Kiem
escrow account as follows:
(continued...)
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