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Petitioner reported as income only the amounts reported on
Forms 1099 that he received from payors. The gross receipts
that respondent determined for the years at issue compared to the
gross receipts petitioner showed on his returns are as follows:
1988 1990
Wells Fargo #25-8511 $43,261
Wells Fargo #295-23527 $16,216 20,113
Pacific Bank 1250-401445 7,500 -0-
Bank of Guam 107202861 20,378 68,534
Less:
Transfers:
Merrill Lynch 4,400
Gross receipts per exam 44,094 127,508
Gross receipts per return 33,673 81,687
Adjustment 10,421 45,821
In 1988 petitioner had accounts in three banks: Wells Fargo
Bank, Pacific Bank, and Bank of Guam. Respondent's agent
included all of them in his bank deposits analysis.
In 1990 petitioner had three principal bank accounts, two in
Wells Fargo Bank and one in Bank of Guam. Respondent disregarded
four other accounts maintained by petitioner as being
inconsequential. Respondent's agent totaled petitioner's
deposits, added in the cash that petitioner received when making
deposits, and subtracted interaccount transfers and nontaxable
items to determine petitioner's total deposits for 1988 and 1990.
OPINION
The use of the bank deposits method for computing income has
long been sanctioned by the Courts. When a taxpayer keeps no
books or records and has large bank deposits, the Commissioner is
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