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to determine whether the deposits [cash transactions] were from a
taxable source.” We disagree.
The record contains copies of three Forms 4789, Currency
Transaction Reports, relating to the NCNB deposit, the Fortune
Bank deposit, and the NationsBank purchase, respectively. Those
reports may have triggered respondent’s examination of
petitioner’s 1992 and 1993 Federal income tax returns. Both the
tax auditor and Appeals officer concerned with the examination of
those returns testified. They told of confusing and
contradictory explanations by petitioner concerning the cash
transactions. The Appeals officer testified that petitioner
“could never specifically tell me what the underlying source of
those deposits were for either 1992 or 1993. She could not
recall.” The tax auditor testified that, initially, petitioner’s
representative stated that there had been no sources of
nontaxable income. We interpret petitioner's initial
representations to respondent to be that there were no
unaccounted-for receipts that could be the source of the cash
transactions. Petitioner then told the tax auditor that the NCNB
deposit was proceeds from a loan from her daughter. She then
provided unverifiable statements from both her daughter and son
that each had made a loan to her. Petitioner’s testimony did not
contradict the substance of respondent’s agents’ narrative.
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