- 24 -
Additional Deductions Claimed by Petitioner
Business Deductions: 1987 1988
Depreciation/Office Equip. $ 77,393 $ 58,045
Bad Debt Deduction -- 127,174
Payment to TABC 15,700 --
NOL Carryforward from 1985 70,000 --
Itemized Deductions:
Medical 15,442 --
Charitable Contributions 2,300 --
Total $180,835 $185,219
OPINION
Unexplained Bank Deposits and Other Funds
On October 13, 1991, and October 26, 1992, respectively, the
normal 3-year period of limitations for assessment expired with
respect to petitioner’s 1987 and 1988 Federal income tax liabilities.
Accordingly, respondent’s 1987 and 1988 notices of deficiency dated
October 13, 1994, and September 26, 1995, respectively, are timely
only if respondent establishes that petitioner’s 1987 and 1988
Federal income tax returns were fraudulently filed or that there was
omitted on those returns more than 25 percent of petitioner’s correct
gross income for each year. Sec. 6501(c), (e).
Generally, bank deposits represent prima facie evidence of
income, and respondent need not prove a likely taxable source of such
income. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). However,
where fraud is at issue, bank deposits will not be treated as taxable
income unless respondent proves a likely taxable source of the bank
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011