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maintain and did not provide books and records that would explain
the nature of these deposits. On brief, respondent conceded a
portion of the adjustment, but maintained that $1,303,207,
identified by payor or source in the following table, constituted
unreported gross income:
Payor or Source Deposit Amount
Holding Co. $787,129.17
Computer Placement Services 40,000.00
Administration Co. Special E 190,077.83
Administration Co. Special 286,000.00
Total 1,303,207.00
Other than notations in his check register that these
deposits were loan proceeds, Kanter provided no documentation
such as promissory notes or evidence of repayments of loans to
support his contention. Kanter's accountant, Gallenberger,
provided no corroborating testimony to show that the deposits in
question constituted loans or that the loans were ever repaid.
OPINION
Where a taxpayer fails to maintain or produce adequate books
and records, the Commissioner is authorized under section 446 to
compute the taxpayer's taxable income by any method which, in the
Commissioner's opinion, clearly reflects income. See Holland v.
United States, 348 U.S. 121, 130-132 (1954); Meneguzzo v.
Commissioner, 43 T.C. 824, 831 (1965); Sutherland v.
Commissioner, 32 T.C. 862 (1959). The Commissioner has latitude
in selecting a method for reconstructing a taxpayer's income, and
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