Pramod and Raj Tandon - Page 7

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               Thereafter, petitioners administratively appealed Revenue              
          Agent Bacino's determinations.  With additional substantiation at           
          the appeals level, respondent's Appeals Office determined that              
          petitioners' cash expenditures during 1992 were $6,152 rather               
          than $31,435 as determined by Revenue Agent Bacino, and that                
          there were additional nontaxable deposits to petitioners'                   
          accounts in the amounts of $23,696 for 1991 ($13,065 for "not               
          sufficient funds" deposits, $6,205 for "insurance loan" and                 
          $4,426 for "insurance proceeds") and $8,485 for 1992 (for "not              
          sufficient funds" deposits).  Thus, respondent's Appeals Office             
          redetermined a total adjustment for 1991 in the amount of                   
          $108,310 and for 1992 in the amount of $133,730.                            
               Petitioners also reasserted their claim that the deposits              
          were from additional loans, gifts, and inheritances.  However,              
          they did not provide any further substantiation for this claim,             
          and respondent's Appeals Office did not accept it.                          
               At the appeals level, petitioners for the first time                   
          actively argued that a large portion of the deposits to their               
          personal bank accounts constituted: (1) Corporate gross receipts            
          previously reported on RAJ's returns, and (2) distributions with            
          respect to petitioners' stock previously reported at the                    
          corporate level.                                                            
               To substantiate the claim that a portion of the deposits               
          constituted corporate gross receipts previously reported on RAJ's           
          returns, petitioners provided the Appeals officer with a summary            




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