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determination of unreported income. The record, however, does
contain substantive evidence supporting respondent's
determination of unreported income.
Revenue Agent Anita Russell, using a bank deposits analysis,
determined that petitioners had unreported income. Use of the
bank deposits method for reconstructing income is well
established. DiLeo v. Commissioner, 96 T.C. 858, 867 (1991),
affd. 959 F.2d 16 (2d Cir. 1992); Estate of Mason v.
Commissioner, 64 T.C. 651, 656 (1975), affd. 566 F.2d 2 (6th Cir.
1977). Under the bank deposits method, there is a rebuttable
presumption that all funds deposited to a taxpayer's bank account
constitute taxable income. Price v. United States, 335 F.2d 671,
677 (5th Cir. 1964); Hague Estate v. Commissioner, 132 F.2d 775,
777-778 (2d Cir. 1943), affg. 45 B.T.A. 104 (1941); DiLeo v.
Commissioner, supra at 868. Once there is evidence of actual
receipt of funds by the taxpayer, that taxpayer has the burden of
proving that all or a part of those funds are not taxable.
Tokarski v. Commissioner, supra. The Commissioner must take into
account any nontaxable sources of deposits of which she is aware
in determining the portion of the deposits that represent taxable
income, but she is not required to trace deposits to their
source. Petzoldt v. Commissioner, 92 T.C. 661, 695-696 (1989).
This case is distinguishable from Weimerskirch v.
Commissioner, supra at 362, where “the Commissioner did not
attempt to substantiate the charge of unreported income by any
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