Keith F. Marason - Page 8

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          not arbitrary or capricious in resorting to the bank deposits               
          method.  DiLeo v. Commissioner, 96 T.C. 858, 867 (1991), affd.              
          959 F.2d 16 (2d Cir. 1992).  The fact that the Commissioner was             
          not completely correct does not invalidate the method employed.             
          Id. at 868.                                                                 
               In the absence of books and records in this case, respondent           
          analyzed petitioner's bank records and prepared schedules that              
          summarized all of the transactions occurring in the accounts                
          during 1988 and 1990.  Respondent identified any deposits which             
          represented nontaxable income or interaccount transfers, or which           
          were receipts of income reported on petitioner's tax return.                
          Consequently, with the exception hereinafter noted, respondent              
          has properly reconstructed petitioner's gross income under the              
          bank deposits method.  Respondent made substantial concessions in           
          connection with her bank deposit analysis, both before and during           
          the trial.  We have examined petitioner's remaining objections              
          and find that all but one have either been taken into account in            
          respondent's analysis or are unsupported by the record.                     
               Petitioner claims that respondent failed to reduce the                 
          additional income computation for 1990 by $1,500, the amount of             
          an interbank transfer from petitioner's account at the Bank of              
          Guam to his account at Wells Fargo Bank.  The record shows two              
          $1,500 checks drawn on the Bank of Guam, and two deposits, each             
          in the amount of $1,500, into petitioner's Wells Fargo Bank                 
          account, all within the April 1, 1990, to April 6, 1990, time               




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