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Revenue Agent Bacino also concluded that for the most part
these individuals lacked credibility. For example, in many
instances, their account of the events surrounding the alleged
loans changed from one meeting to the next. In other instances,
there was a failure to recall the details regarding the alleged
loan transactions. In one instance, the lender could not be
reached because he was located outside the country. Revenue
Agent Bacino further determined that even if petitioners had
borrowed such amounts, there was no persuasive evidence that the
loan proceeds were paid in cash and deposited to petitioners'
accounts.
In concluding his investigation of the leads provided by
petitioners, Revenue Agent Bacino determined that petitioners had
failed to substantiate a nontaxable source of income with respect
to a large portion of the deposits. His final report with
respect to petitioners' individual returns reflected the
following:
1991 1992
Total deposits: $217,862 $160,345
Total cash expenditures 31,435
Nontaxable items1 (68,707)
Reported income (17,149) (24,282)
Total adjustment 132,006 167,498
1 Includes "not sufficient funds" items and inter-account transfers.
Revenue Agent Bacino did not make any adjustments to RAJ's
returns.
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Last modified: May 25, 2011