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Prior to performing a bank deposits analysis, Agent Koczergo
performed a “cash T analysis” consisting of amounts that she
concluded represented petitioners' personal expenditures. That
analysis is intended to measure a taxpayer's reported income
against personal expenditures to determine whether more was spent
than was reported. Agent Koczergo's analysis reflected that
petitioners expended about $77,000 more than they reported for
the 1993 year, and, based on that analysis and because of
petitioners' inadequate records, Agent Koczergo proceeded to
employ the bank deposits method to reconstruct petitioners'
income for 1993.
Petitioners maintained four bank accounts during 1993.
Petitioners designated three of the accounts as follows: “Pamela
T. Rifkin DBA Metamorphosis Design Group Client Trust Account”,
“Pamela T. Rifkin DBA Metamorphosis Design Group General
Account”, and “Stephen H. Rifkin or Pamela Rifkin”. The balance
of the Pamela T. Rifkin DBA Metamorphosis Design Group Client
Trust Account was about $9,000 at the beginning and $6,000 at the
end of 1993, and petitioners deposited $390,804.74 into it during
the 1993 year. The fourth account was not used in the bank
deposit analysis performed by Agent Koczergo. Other than with
respect to $12,535 of disability payments received, petitioners
did not show or advise respondent that they had additional
nontaxable transfers between accounts and/or received nontaxable
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Last modified: May 25, 2011