- 7 -
(9th Cir. 1984); DiLeo v. Commissioner, 96 T.C. 858, 867 (1991),
affd. 959 F.2d 16 (2d Cir. 1992). Further, for the years in
issue, where respondent uses the bank deposits method to
reconstruct a taxpayer's income, respondent's determination has a
presumption of correctness, and the taxpayer has the burden of
proving that the deposits are not attributable to taxable income.
See Rule 142(a); Ruark v. Commissioner, 449 F.2d 311, 312
(9th Cir. 1971), affg. per curiam T.C. Memo. 1969-48; Mills v.
Commissioner, 399 F.2d 744, 749 (4th Cir. 1968), affg. T.C. Memo.
1967-67; Doll v. Glenn, 231 F.2d 186, 188 (6th Cir. 1956);
Tokarski v. Commissioner, 87 T.C. 74, 76-77 (1986).
Petitioners contend that the funds deposited into the
partnership’s and into petitioners' bank accounts that respondent
treats as unexplained bank deposits and therefore as additional
taxable income (for the partnership -- $146,609 and $266,352 for
1989 and 1990, respectively; for petitioners -- $117,514 for
1990) are largely attributable to sales of videos that petitioner
owned personally, in which videos petitioner had a cost or tax
basis in excess of the amount for which the videos were sold, and
petitioners therefore contend that the bank deposits in question
do not constitute taxable income.
Respondent argues that petitioner has not established the
nontaxable source of the bank deposits in question.
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