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implausibility of petitioner’s explanations, Bradford v.
Commissioner, 796 F.2d 303, 307 (9th Cir. 1986) (and cases
therein cited), affg. T.C. Memo. 1984-601; Boyett v.
Commissioner, 204 F.2d 205, 208 (5th Cir. 1953), affg. a
Memorandum Opinion of this Court dated Mar. 14, 1951.
A. Kenmore
(1) Underpayments of Tax
Respondent’s determination of a deficiency against Kenmore
for its fiscal 1980 is based entirely on disallowance of a
carryback from its fiscal 1981. Supra note 7. This disallowance
in turn is based entirely on respondent’s determination that
Kenmore did not have any carryback from Kenmore’s fiscal 1981.
We consider first Kenmore’s tax liabilities for its fiscal 1981
and 1982, and then consider how our conclusions for these years
affect its fiscal 1980.
As shown supra in tables 3 and 4, respondent’s
determinations as to Kenmore’s income for its fiscal 1981 and
fiscal 1982 are almost entirely on account of adjustments that
(1) increase Kenmore’s gross receipts, and (2) increase Kenmore’s
purchase expenses, but by substantially lesser amounts.
(a) Gross Receipts
Respondent used the bank deposits method and an analysis of
checks disbursed to determine Kenmore’s income for its fiscal
1981 and fiscal 1982. It is well established that bank deposits
are evidence of income where the deposits were made by the party
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