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Commissioner, 102 T.C. 632, 645 (1994); Parks v. Commissioner,
supra; Estate of Mason v. Commissioner, supra. Furthermore, the
Court of Appeals for the Sixth Circuit, to which this case is
appealable, has accepted the bank deposit method of income
reconstruction. Bevan v. Commissioner, 472 F.2d 1381 (6th Cir.
1973), affg. per order T.C. Memo. 1971-312; see also Woods v.
Commissioner, 929 F.2d 702 (6th Cir. 1991), affg. without
published opinion T.C. Memo. 1989-611.
In challenging respondent's income reconstruction,
petitioners introduced evidence that was intended to corroborate
their claim that the deposits were due to nontaxable sources.
This evidence primarily consists of their testimony, bank account
statements, credit card statements, and canceled checks. Upon
review of the evidence presented, we are persuaded that the
source of certain amounts of the deposits were from nontaxable
income items, as set forth below.
At trial, respondent stressed the fact that petitioner was
unable to exactly match his nontaxable payments received with
specific bank deposits. Petitioner is not required to directly
match nontaxable funds to deposits. If the funds are nontaxable,
they are removed from the unreported income determined by
respondent.
A. 1991
Except for the following amounts, we hold the deposits are
income to petitioners subject to tax pursuant to section 61(a).
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