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This case was one of the first assigned to Ms. Koczergo
after she had become an internal revenue agent. Petitioners'
records were requested, and the data provided was incomplete, so
Agent Koczergo used the bank deposits method to analyze and
reconstruct petitioners' income. The records received from
petitioners included partial bank statements, clients' ledgers,
and canceled checks (personal and business, except for the month
of December 1993).
Petitioners also provided a document they denominated as a
“ledger” that had been maintained by Mr. Rifkin. The document
consisted of a single page reflecting the 1993 monthly “Gross”
and “Profit”, along with running totals for each month. The
ledger did not contain any details as to the name of customers or
any other references that could be reconciled with other business
documents, records, or bank records. The total “Profit”
reflected on the ledger for 1993 was $85,990.87, and the total
"Gross" for 1993 was reflected as $248,089.41.
With respect to other documents provided by petitioners,
Agent Koczergo did not find them to be complete and reliable due
to changes (including erasures and “white-outs”) and because the
backup documents (such as invoices and client proposals) were not
available to her. Because of these circumstances, Agent Koczergo
utilized the bank deposits method to reconstruct petitioners'
1993 income.
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Last modified: May 25, 2011