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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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