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Respondent computed petitioners’ 1991 Schedule C gross
receipts from LECC using the bank deposits method on the basis of
deposits into the Sanwa account during 1991 and determined that
petitioners underreported their gross receipts by $83,166.
Respondent allowed petitioners a deduction for the $46,165 in
refunds that were paid to failing students during 1991, which
petitioners had not claimed on their 1991 tax return.
Accordingly, respondent determined that petitioners had
unreported Schedule C net income of $37,001 in 1991.
OPINION
Respondent determined that petitioners had unreported
Schedule C net income for 1991 in the amount of $37,001 from bar
review courses that petitioner offered through LECC. Petitioners
have the burden of showing that they did not have income in the
amount determined by respondent. Rule 142(a).3 Petitioners have
conceded that they underreported their Schedule C net income by
$1,000. Petitioners have not offered any explanation for $6,001
in unreported net income determined by respondent. Accordingly,
we find that petitioners have unreported their taxable income in
these amounts.
3 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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Last modified: May 25, 2011