Investment Research Associates - Page 323




                                       - 384 -                                         
          engaged in an income-producing business, and (2) that regular                
          deposits of funds having the appearance of income were made to               
          bank accounts during the course of business.  After the                      
          Government has made this showing and given the taxpayer credit in            
          the income computation for any clearly identified nontaxable                 
          sources, the taxpayer has the burden to explain "as far as                   
          possible" the nature of the deposits.                                        
               No credible evidence was introduced to support Kanter's                 
          assertion that the deposits were loans.  The bank deposit slips              
          did not indicate the source and nature of the payments.  Although            
          Kanter produced a summary analysis regarding the deposits and his            
          check register containing notations that certain deposits were               
          loans, the underlying documents pertaining to the purported loans            
          were not provided.  No promissory notes and no journals or                   
          ledgers with respect to interest payments are extant.  Kanter's              
          self-serving testimony is not persuasive in view of the dubious              
          accounting techniques used by Administration Co. and Kanter's                
          failure to produce the necessary documents to establish that                 
          there were loans.  We find the testimony of the accountant,                  
          Gallenberger, unreliable and her analysis fatally flawed because             
          she did not rely on the source documents for the purported loans.            
          She did not review the records of any entities to or by which the            
          purported loans were made.  Moreover, the use of schedules and a             
          summary analysis prepared for trial further lacked credibility in            






Page:  Previous  374  375  376  377  378  379  380  381  382  383  384  385  386  387  388  389  390  391  392  393  Next

Last modified: May 25, 2011