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Information from the statements regarding deposits was
essential because Ms. Davis was attempting to verify the income
claimed by petitioner through the bank deposit method. Absent
such information she would not be able to correctly determine if
petitioner's income was accurately reported. At some point
during the examination, Mr. Bruno became aware that Ms. Davis was
attempting to verify the medical practice income through the bank
deposit method.
On November 2, 1989, Ms. Davis met with petitioner and Mr.
Bruno at Mr. Bruno's office to conduct her initial interview of
petitioner. At that meeting petitioner told her that during 1987
and 1988 most of his patients were personal injury patients.
When he received checks for payment of his services, he stated
that he deposited them into his First Federal checking account.
He stated that he kept up with his income in his head.
On November 22, 1989, Ms. Davis submitted a third IDR to Mr.
Bruno. It again requested: "All bank statements (not previously
submitted) for all accounts. This includes checking, savings and
investment accounts. Canceled checks and deposit slips should be
presented with the bank statements". Mr. Bruno sent a copy of
this IDR to petitioner and advised him that the requested
documents had to be produced.
On December 8, 1989, Ms. Davis met with petitioner, Mr.
Bruno, and two of petitioner's attorneys at petitioner's medical
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