Forest L. Buckmaster - Page 7

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            contending primarily that Ideal Management was a sham.                                       
            Petitioner argues that it was not.  Petitioner, citing Portillo                              
            v. Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in part and                            
            revg. in part T.C. Memo. 1990-68, contends primarily that                                    
            respondent's determination was a "naked assertion" because                                   
            respondent did not audit Ideal Management.  Petitioner also                                  
            contends that Ideal Management was not a sham.                                               
                  We agree with respondent that the disputed income is                                   
            includable in petitioner's 1992 gross income because Ideal                                   
            Management was a sham; i.e., it lacked economic reality.  We find                            
            first that respondent's determination rests on a solid                                       
            foundation.  Respondent performed properly a bank deposit                                    
            analysis of petitioner's and Ideal Management's bank accounts,                               
            see Parks  v. Commissioner, 94 T.C. 654, 658 (1990); Nicholas v.                             
            Commissioner, 70 T.C. 1057, 1064 (1978); see also Estate of Mason                            
            v. Commissioner, 64 T.C. 651, 656-657 (1975), affd. 566 F.2d 2                               
            (6th Cir. 1977); Harper v. Commissioner, 54 T.C. 1121, 1129                                  
            (1970), with the knowledge that petitioner was subject to an                                 
            outstanding Federal tax lien aggregating almost $100,000, that he                            
            was connected with Ideal Management, and that his reported gross                             
            income and itemized deductions for 1992 had decreased                                        
            dramatically from prior years.  Respondent reached her                                       
            determination in the light of United States v. Scott, 37 F.3d                                
            1564 (10th Cir. 1994).  In Scott, the Court of Appeals for the                               
            Tenth Circuit examined certain trusts involving IBA and Mr. Yung,                            

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