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With regard generally to respondent's bank deposits analysis
of additional income received by petitioner, the evidence
indicates that petitioner realized substantial proceeds from the
sale of stock and commodities. Also, petitioner deposited funds
received from investors into his personal bank accounts, and
petitioner invested those funds for his personal benefit.
Accordingly, those funds are to be treated as converted to
petitioner’s personal use and as a taxable source of deposits
into petitioner's bank accounts. It is thus established that at
least two taxable sources existed for the large deposits made
into petitioner's personal bank accounts (namely, proceeds from
the sale of stock and commodities and investor funds converted to
petitioner’s personal use).
Under the bank deposits method of proof and for purposes of
the tax deficiencies at issue herein, we conclude that for 1985,
1986, 1987, and 1988, total deposits of $7,376, $189,773,
$1,405,320, and $34,532, respectively, into petitioner's personal
bank accounts are to be treated as taxable income to petitioner.
No credible evidence indicates that petitioner used those funds
for business purposes.
The funds, however, deposited in 1986 and 1987 into ReCom's
corporate bank account at Zions First National Bank in the total
amounts of $87,665 and $176,130, respectively, should not be
treated as taxable income to petitioner. No credible evidence
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