- 11 - In January 1993, petitioner's friend, Vilma Reye, lent her $500. In April 1993, Petitioner repaid the loan in its entirety. OPINION A. Respondent's Reconstruction of Income Section 6001 requires all taxpayers to maintain adequate books and records of taxable income. In the absence of adequate books and records, the Commissioner is authorized to reconstruct the taxpayer's income by any reasonable method that clearly reflects the taxpayer's income. Sec. 446(b); Holland v. United 7(...continued) Initial unreported income in the $26,987 statutory notice Cash expenditure increase for additional +14,484 Schedule C deductions allowed Decrease in bank deposits for interbank -22,500 transfers Increase in cash expenditures resulting +22,500 from decrease in total checks disbursed Decrease in cash expenditures resulting -1,975 from decrease in total expenditures relating to overstatement of payment at closing of the house in the statutory notice Decrease in cash expenditures relating -6,166 to Schedule E expenses disallowed Adjustment for $3,841 error in -7,682 Ms. Dickerson's report. Instead of being a cash outlay, such amount represents an excess of total checks disbursed over total expenditures Revised unreported income 25,648Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011