- 8 - 1987 Puerto Rican tax return and a certificate of nonfiling for petitioners for 1988 through 1994. Petitioners do not recall having filed tax returns in Puerto Rico after 1988. Petitioners reported adjusted gross income of $32,041 on their 1990 Federal income tax return. That return did not report a capital loss, and petitioners did not make an election to carry forward a net operating loss. Respondent's Determination of Unreported Income In the audit of the income tax returns, the revenue agent deemed petitioners' records to be inadequate. Consequently, he computed their taxable income for 1991 and 1992 by using a bank deposits analysis. He took the total deposits from the personal and business bank accounts and combined them. He then subtracted amounts to account for interbank transfers, gifts, loans, redeposits, and other nontaxable items to determine unreported income. The revenue agent who performed the bank deposits analysis requested an extension of time to complete it but the extension was not granted by petitioners. At trial the agent stated that he thought the determination was, in his best estimate, correct. In the notice of deficiency, respondent determined unreported income by the bank deposit analysis as follows: Bank Deposit Analysis 1991 1992 Deposits to Business Account--Osceola $1,536,251 $3,598,451 Deposits to Personal Account--Barnett 67,066 52,403Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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