Ronnie F. Judy - Page 4

                                                - 4 -                                                 

            thus depleted and moved the ammunition box to a new location                              
            unknown to petitioner.                                                                    
                  For reasons not disclosed in the record, the criminal                               
            investigation was discontinued later that year and the case                               
            referred to the Examination Division of the IRS.  The audit of                            
            petitioner’s 1989 and 1990 returns was conducted by Revenue Agent                         
            Elizabeth Duffy (Duffy).  Petitioner did not show Duffy any                               
            records.  In the absence of records, Duffy reconstructed                                  
            petitioner’s income using the source and application of funds                             
            method.  Under this method, she determined the total amount of                            
            petitioner’s expenditures plus bank deposits in 1989 and 1990 and                         
            the total amount of funds available to him from identified                                
            sources in each year.  In computing petitioner’s available                                
            resources, Duffy included the $16,383 and $21,698 of receipts                             
            traceable to farm sales but not reported on petitioner’s returns.                         
            To the extent that petitioner’s expenditures plus deposits                                
            exceeded funds available from identified sources, she presumed                            
            that petitioner had additional unreported income from farming.                            
            Petitioner’s uncorroborated account of his withdrawals of his                             
            father’s inheritance from the ammunition box did not persuade her                         
            otherwise.  The adjustments set forth in the notice of deficiency                         
            followed Duffy’s computations.                                                            
                  Before trial respondent revised the revenue agent’s                                 
            computations on the basis of additional information obtained from                         

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011