-31-
There is no apparent relationship between the transactions
that we determined were fraudulently reported for 1988 and the
transactions that were the basis of respondent's determination
for 1990 and 1991. Thus, there is no discernible pattern from
which fraud can be inferred. As appears from the discussion
below, the other items in dispute for 1990 and 1991 would not
support a determination of fraud. Respondent's determination
under section 6663, therefore, will not be sustained.
Respondent's alternative determination of the accuracy-related
penalty under section 6662(a) for 1990 and 1991 is discussed
below.
Unreported Income--Bank Deposits
Respondent determined during the audit, based on a bank
deposits analysis, that petitioners failed to report $48,160 of
income on their 1988 return. At trial, respondent introduced a
second bank deposits analysis increasing the claim for
underreporting to $79,147. While petitioners generally argue
that respondent's determination is incorrect, petitioners
specifically contend that respondent's analyses do not accurately
reflect certain income reported on their 1988 return.
The bank deposits analysis that was prepared during the
audit of petitioners' return is not reliable. There is no
evidence that this analysis took into account transfers,
redeposits, or returned checks. Also, this analysis does not
account for the proceeds from petitioners' sale of Analog stock.
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