Willie Thomas - Page 6

                                        - 6 -                                         
          $4,271.40, $4,672.80, $5,166 and $4,577.66 for 1984, 1985, 1986,            
          and 1987, respectively.                                                     
                                       OPINION                                        
          I.  Unreported Income                                                       
               Gross income includes all income from whatever source                  
          derived.  Sec. 61(a).  Every taxpayer is required to maintain               
          adequate records of taxable income.  Sec. 6001.  When a taxpayer            
          does not maintain adequate records, the Commissioner may                    
          reconstruct income in accordance with a method that clearly                 
          reflects the full amount of income received.  Sec. 446(b);                  
          Meneguzzo v. Commissioner, 43 T.C. 824, 831 (1965).                         
               Because petitioner maintained inadequate records of his                
          income-producing activities, respondent used the net worth method           
          of income reconstruction to determine petitioner's taxable                  
          income.  Under this method, income is computed by determining a             
          taxpayer's net worth at the beginning and end of a taxable year.            
          The difference between the amounts is the increase in net worth.            
          An increase in a taxpayer's net worth, plus his nondeductible               
          expenditures, less nontaxable receipts, may be considered taxable           
          income.  Holland v. United States, 348 U.S. 121, 125 (1954);                
          United States v. Giacalone, 574 F.2d 328, 330-331 (6th Cir.                 
          1978).                                                                      









Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011