-14-
Cir. 1991), affg. T.C. Memo. 1989-552 (the key is connecting
taxpayers to assets, not to a business).
Since respondent's deficiency notice was not arbitrary,
petitioner has the burden of going forward with the evidence as
well as the ultimate burden of persuasion. See Dellacroce v.
Commissioner, supra at 280.
Issue 2. Unreported Income for 1991, 1992, and 1993
Utilizing the bank deposits and cash expenditures method of
income reconstruction, respondent determined petitioner had
income in the amounts of $24,592, $74,634, and $86,464 for 1991,
1992, and 1993, respectively.
Every taxpayer is required to maintain adequate records of
taxable income. Sec. 6001. Petitioner did not file a Federal
income tax return or make any estimated Federal income tax
payments for any of the years in issue. Nor did he maintain
adequate records from which the amount of his income or Federal
income tax liability for any of the years in issue could be
computed. In the absence of such records, the Commissioner may
reconstruct the taxpayer's income by any method that, in her
opinion, clearly reflects income. Sec. 446(b); Parks v.
Commissioner, 94 T.C. 654, 658 (1990). The Commissioner's method
need not be exact but must be reasonable. Holland v. United
States, 348 U.S. 121 (1954).
The bank deposits method for computing unreported income has
long been sanctioned by the courts. DiLeo v. Commissioner, 96
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011