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cash.
C. Petitioners' Interest Deduction
On or about February 10, 1992, respondent assessed
petitioners additional income tax of $286,147.50 for their 1986
tax year and $272,146 for their 1987 tax year. The assessments
for 1986 and 1987 resulted from respondent's increase in
petitioners' reported gross business profit for those years,
based upon respondent's use of a bank deposits analysis. In
1992, petitioners paid $393,024 in interest on the additional
amounts assessed for 1986 and 1987. Petitioners deducted the
amount of the interest payment on their 1992 Federal income tax
return. Respondent disallowed that deduction of $393,024.
OPINION
I. Petitioners' Records of Income
Taxpayers must maintain accounting records which enable them
to file correct income tax returns. Sec. 6001; DiLeo v.
Commissioner, 96 T.C. 858, 867 (1991), affd. 959 F.2d 16 (2d Cir.
1992). Section 6001 provides:
SEC. 6001. NOTICE OR REGULATIONS REQUIRING RECORDS,
STATEMENTS, AND SPECIAL RETURNS.
Every person liable for any tax imposed by this
title, or for the collection thereof, shall keep such
records, render such statements, make such returns, and
comply with such rules and regulations as the Secretary
may from time to time prescribe. * * *
In this regard, section 1.446-1(a)(4), Income Tax Regs.,
provides in part:
Each taxpayer is required to make a return of his
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