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existence and amount of unreported income by any method that will
clearly reflect the taxpayer’s income. Sec. 446(b); Holland v.
United States, 348 U.S. 121, 130-132 (1954); Harper v.
Commissioner, 54 T.C. 1121 (1970). The premise underlying this
method of income reconstruction is, absent some explanation, that
a taxpayer’s bank deposits represent taxable income. The total
of all deposits is determined by the Commissioner to arrive at
the taxpayer’s income. Adjustments are then made to eliminate
deposits that reflect nonincome items such as gifts, loans,
transfers between bank accounts, and redeposits.
Petitioners bear the burden of proving that respondent’s
determinations, including unreported income, are incorrect. Rule
142(a); Nicholas v. Commissioner, 70 T.C. 1057, 1064 (1978).
Petitioners provided no sufficient evidence indicating that the
excess deposits into their bank account during the years at issue
were attributable to nontaxable sources.
Petitioners argue that respondent’s use of the bank deposits
method does not accurately reflect the amount of unreported
income for the years at issue. Without more than petitioner’s
testimony that he believes respondent’s determinations to be
incorrect, however, we have no way of making any adjustments to
respondent’s calculations.
Accordingly, we find that petitioners have failed to meet
their burden of proof, and respondent’s determination with
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