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taxpayer's self-serving testimony that deposits to the taxpayer's
account were nontaxable loan deposits).
Respondent was also substantially justified in rejecting
petitioners' position regarding the corporate source of deposits
to petitioner's personal accounts. Section 6001 imposes on
petitioners an affirmative duty to maintain books and records
sufficient to support items reported on their returns. With this
well-established law in mind, we think that it was reasonable for
respondent to make the adjustments pursuant to the bank deposits
analysis and to refuse to concede any of these adjustments until
he received and verified petitioners' substantiation for these
amounts. See Harrison v. Commissioner, 854 F.2d 263, 265 (7th
Cir. 1988), affg. T.C. Memo. 1987-52; Sokol v. Commissioner,
supra at 765. Respondent was not required to accept
unconditionally petitioners' uncorroborated summary bank account
statements prepared by their accountant or petitioners' otherwise
unsubstantiated statements regarding nontaxable income flowing
from a corporate source.
We also observe that petitioners ultimately conceded that
they failed to report 50 percent of the unreported income
determined in the notice of deficiency.
Petitioners rely heavily on the fact that respondent's
counsel agreed to settle this case for 50 percent of the
unreported income determined in the notice of deficiency even
though he was given no more information than Revenue Agent Bacino
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