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whole in the sales reported on petitioners' 1990 return. Because
respondent has given credit for the sales petitioners reported,
the reductions proposed by petitioners may be duplications.
Since petitioners have failed to distinguish adequately between
the jewelry sales and M&L check exchanges, respondent's
determination stands.
We also note that petitioners have not shown how their
adjustments to Careswell's check exchange analysis can be
integrated with the bank deposits analysis. In addition,
petitioners have not shown that the check exchange analysis
performed by Careswell and/or the modified version advanced by
petitioners would more accurately reflect income than the bank
deposits method used by respondent. The record reflects more
than one potential source of unreported income, and the check
exchange analysis would only partially address that aspect,
whereas the bank deposits analysis would include all deposited
and identified income from all sources.
Petitioners’ final argument is an attempt to attack
indirectly the bank deposits analysis by arguing that any income
from the check exchanges was either not known or not reportable
until after the 1990 taxable year. Relying on the includability
rule of section 451 and cases4 addressing whether there is a
4 Some of the cases cited by petitioners include Estate of
Whitaker v. Commissioner, 259 F.2d 379, 382 (5th Cir. 1958),
affg. 27 T.C. 399 (1956); Penn v. Robertson, 115 F.2d 167, 173
(continued...)
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