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method is a direct method of proof, and it has been approved by
this Court. See Schooler v. Commissioner, 68 T.C. 867 (1977);
Schaaf v. Commissioner, T.C. Memo. 1991-530.
Respondent began the analysis by examining petitioner's
Forms 1099 from 1989 and IRP transcripts for 1989 and 1990.
Respondent determined that the amounts reported by petitioner as
medical practice gross receipts were virtually identical to the
amounts reported on the Forms 1099 and the IRP's. Respondent
then analyzed specific items deposited into petitioner's bank
accounts during 1988, 1989, and 1990. These deposits included
cash and personal checks from patients which were gross receipts
from petitioner's medical practice. Respondent prepared
schedules of omitted income for these items. The schedules show
that petitioner did not report substantial amounts of medical
practice gross receipts.
This case is distinguishable from Weimerskirch v.
Commissioner, supra, where "the Commissioner did not attempt to
substantiate the charge of unreported income by any other means,
such as by showing * * * [the taxpayer's] net worth, bank
deposits, cash expenditures, or source and application of funds."
Id. at 362. Additionally, in Weimerskirch, the taxpayer was not
shown by admissible evidence to have actually possessed any of
the funds that the Commissioner determined to be taxable income.
In the instant case, respondent has substantiated the
determination with predicate evidence. See Blohm v.
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