- 14 -
failed to report any income from the operation of Acacia Press
and Print Technology for 1988. Petitioners reported no gross
receipts for 1988 other than $150,044 from Maple Press. During
the year, however, they made deposits of $304,087, $176,803, and
$48,368 into the bank accounts of Maple Press, Acacia Press, and
Print Technology, respectively and they failed to report interest
income of $9.
Petitioners omitted items which constituted more than
25 percent of their gross income on their 1988 Federal income tax
return and which should have been included in income. After
deducting $150,044 in gross receipts reported, $14,419 in ISF
checks, and $32,657 in interaccount transfers, petitioners'
unreported gross receipts of $332,147 represented more than a
25-percent omission. As determined above, respondent's bank
deposits analysis proves that these unreported gross receipts are
properly includable in gross income. We find that respondent has
proved a likely source of income, namely the print shop business,
and that petitioners' claim of a nontaxable source, in the form
of loans, is not creditable. We hold that respondent is not
barred from assessing tax and additions to tax against
petitioners for their 1988 taxable year. In so holding, we note
that Kavoosi v. Commissioner, T.C. Memo. 1986-190, a case relied
upon heavily by petitioners to support a contrary holding, is
distinguishable on its facts.
C. Additions to Tax Under Section 6651(a)(1)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011