- 16 - 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 BacinoPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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