Big Hong Ng - Page 8

          1993), affg. T.C. Memo. 1991-636; Erickson v. Commissioner, 937             
          F.2d 1548, 1551 (10th Cir. 1991), affg. T.C. Memo. 1989-552.  We do         
          not find that respondent's determinations were arbitrary and thus           
          do not agree with Ms. Ng's assertion that the burden of proof               
          should shift to respondent.                                                 
               Ms. Ng transacted business using large amounts of cash.  She           
          commingled her personal funds with funds of entities she owned or           
          controlled in her U.S. and Hong Kong bank accounts, and she                 
          commingled the funds of one entity with those of another.                   
          Moreover, she disregarded the legal ownership of the accounts when          
          writing checks.  For example, she deposited into Strong Hope's              
          checking account rents from property located at 857 Clay Street,            
          which was owned by Strong Hope Limited (Calif.) and wrote checks            
          from Strong Hope's checking account to pay expenses of property             
          located at 1610 Lombard Street which she wholly owned.  Ms. Ng              
          claims she "commingled funds and used cash and cashier's checks on          
          many occasions out of fear that the respondent or other creditors           
          would seize her accounts."                                                  
               Revenue Agent Theresa Martin (the revenue agent) reconstructed         
          Ms. Ng's income for the years under consideration by analyzing Ms.          
          Ng's bank deposits and cash expenditures.  Use of the bank deposits         
          and cash expenditures method to reconstruct income is well                  
          established. DiLeo v. Commissioner, 96 T.C. 858, 867 (1991), affd.          
          959 F.2d 16 (2d Cir. 1992); Parks v. Commissioner, 94 T.C. 654, 658         
          (1990); Nicholas v. Commissioner, 70 T.C. 1057, 1064 (1978); Estate         

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