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Generally, for purposes of tax deficiencies determined in
respondent's notices of deficiency, bank deposits are treated as
prima facie evidence of receipt of taxable income, and respondent
need not prove a taxable source of the deposits. Parks v.
Commissioner, supra; Tokarski v. Commissioner, 87 T.C. 74, 77
(1986); Estate of Mason v. Commissioner, 64 T.C. 651, 657 (1975),
affd. 566 F.2d 2 (6th Cir. 1977).
As explained, respondent argues that petitioner should be
taxed (1) under the specific item method of proof on specific
items of income that the evidence indicates petitioner received
during the years in issue (including gain petitioner realized on
the sale of stock and commodities and on funds petitioner
received from checks that were not deposited into petitioner's
bank accounts but that were made payable to petitioner or
endorsed over to petitioner) and (2) under the bank deposits
method of proof on funds deposited into petitioner’s personal and
ReCom’s bank accounts.
Respondent contends that petitioner's participation on his
own behalf in numerous transactions for the purchase and sale of
stock and commodities and petitioner's treatment as his own of
funds received from investors constitute the primary taxable
source of bank deposits charged to petitioner as taxable income.
Petitioner contends that funds he received from investors
were all invested on behalf of investors, that gains realized on
the sale of stock and commodities should not be treated as
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