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Commissioner generally may recompute the taxpayer's income under
any method that the Commissioner determines clearly reflects
income. Sec. 446(b); Commissioner v. Hansen, 360 U.S. 446, 467
(1959); Cole v. Commissioner, 586 F.2d 747, 749 (9th Cir. 1978),
affg. 64 T.C. 1091 (1975); Meneguzzo v. Commissioner, 43 T.C.
824, 831 (1965). The Commissioner may use any method that is
reasonable in light of the facts and circumstances of the
particular case. Giddio v. Commissioner, 54 T.C. 1530, 1532-1533
(1970).
When the taxpayer's records are incomplete, the Commissioner
may rely on the bank deposits method to reconstruct income.
Nicholas v. Commissioner, 70 T.C. 1057, 1064 (1978); Estate of
Mason v. Commissioner, 64 T.C. 651, 656 (1978), affd. 566 F.2d
2 (6th Cir. 1977). The propriety of this method is well
established. Parks v. Commissioner, 94 T.C. 654, 658 (1990);
Nicholas v. Commissioner, supra at 1064; see also Estate of Mason
v. Commissioner, supra at 656-657; Harper v. Commissioner,
54 T.C. 1121, 1129 (1970). Although not conclusive, we consider
bank deposits to be prima facie evidence of income. Tokarski v.
Commissioner, 87 T.C. 74, 77 (1986); Estate of Mason v.
Commissioner, supra at 656-657; see also Price v. Commissioner,
T.C. Memo. 1995-187, supplemented by T.C. Memo. 1995-290.
Once a bank deposits analysis is performed, the burden
normally is on the taxpayer to prove that the deposits do not
represent unreported income. See Rule 142(a); Welch v.
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