- 16 -
them. No adjustment to respondent’s bank deposit analysis is
necessary for this item.
D. Loans Payable to Mrs. Bacon
Petitioners argue that respondent should reduce their
unreported taxable income under the bank deposit analysis by
$319,109. Petitioners allege that such an adjustment is
necessary because in 1989 Radtam owed Mrs. Bacon $319,109.
Petitioners argue that, to the extent that the bank deposit
analysis indicates the underreporting of income from Radtam,
petitioners should be given credit for $319,109 as being for the
repayment of previous loans from Mrs. Bacon. Respondent argues
that petitioners have not substantiated that Radtam owed Mrs.
Bacon $319,109 in 1989.
To support petitioners’ contention, petitioners rely on
Radtam’s Federal income tax return for the fiscal year ended June
30, 1989. Page four of the income tax return included a balance
sheet which listed “Mortgages, notes, bonds payable in less than
1 year” (notes payable) of $319,109. The income tax return does
not identify the persons or entities to whom Radtam owed
$319,109. Petitioners’ C.P.A., Jerome Collins, prepared the June
30, 1989, Federal income tax return.17 The income tax return was
filed in March of 1991.
17Mr. Collins also prepared petitioners’ individual Federal
income tax returns for the years 1988, 1989, 1990, and 1991.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011