Lucila Novoa - Page 13

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          bank deposits and cash expenditure method to reconstruct                    
          petitioner's income and to determine that petitioner had                    
          unreported income for the 1993 taxable year.9  The reconstruction           
          is especially reliable in the present case because petitioner               
          either stipulated or verified through her testimony the amount of           
          deposits made to her bank accounts and the amount of cash that              
          she expended during the 1993 calendar year.                                 
               Generally, respondent's determination in a statutory notice            
          of deficiency is entitled to a presumption of correctness.  Welch           
          v. Helvering, 290 U.S. 111, 115 (1933).  The fact that                      
          respondent's revised reconstruction reduces the amount of                   
          petitioner's unreported income does not affect the presumption of           
          correctness attached to respondent's original determination of              
          petitioner's tax deficiency, to the extent not reduced by                   
          respondent's revision.  Gobins v. Commissioner, 18 T.C. 1159,               
          1168-1169 (1952), affd. per curiam 217 F.2d 952 (9th Cir. 1954).            
               Petitioner does not argue that respondent's determination is           
          not entitled to a presumption of correctness.10  Instead,                   

               8(...continued)                                                        
          all such expenses, except depreciation, as cash expenditures for            
          purposes of reconstructing petitioner's income.                             
               9 Respondent's reconstruction of income is a revised version           
          of the Tax Auditor's reconstruction that was attached to the                
          statutory notice of deficiency.  Respondent's revised                       
          reconstruction determines petitioner to have less unreported                
          income than the original reconstruction.  See supra pp. 8-9.                
               10 In cases of unreported income, the Court of Appeals for             
                                                             (continued...)           



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