- 10 -
64 T.C. 1091 (1975); Meneguzzo v. Commissioner, 43 T.C. 824, 831
(1965). The Commissioner may use any method that is reasonable
in light of the facts and circumstances of the particular case.
Giddio v. Commissioner, 54 T.C. 1530, 1532-1533 (1970).
When the taxpayer's records are incomplete, the Commissioner
may look to the bank deposits method as evidence of income.
Nicholas v. Commissioner, 70 T.C. 1057, 1064 (1978); Estate of
Mason v. Commissioner, 64 T.C. 651, 656 (1975), affd. 566 F.2d
2 (6th Cir. 1977). The propriety of this method is well
established. Parks v. Commissioner, 94 T.C. 654, 658 (1990);
Nicholas v. Commissioner, supra at 1064; see also Estate of Mason
v. Commissioner, supra at 656-657; Harper v. Commissioner,
54 T.C. 1121, 1129 (1970).
In this case, respondent used the bank deposits method to
reconstruct petitioners' income. Respondent determined that
petitioners received and failed to report gross income totaling
$449,306 during their 1986 taxable year. She determined this
amount by deducting $125,199 in gross receipts reported, $9,047
in ISF checks, $15,299 miscellaneous bank debits, and $7,310 in
interaccount transfers from the $606,161 in total bank deposits
during 1986. Respondent further determined that petitioners
received and failed to report gross income totaling $401,226
during their 1987 taxable year. She determined this amount by
deducting $126,267 in gross receipts reported, $38,516 in ISF
checks, $18,090 in miscellaneous bank debits, and $239,595 in
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