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income determined under the bank deposits method of proof is
taxable to petitioner.
In the related case of Adair v. Commissioner, T.C. Memo.
2000-110, docket Nos. 12103-97 and 20465-97, also filed this
date, we charge the Adairs with the other half of the income of
the roofing business relating to deposits into the checking
account.
For each year in issue, our calculations of petitioner’s
taxable income are set forth below. The bank deposits that are
identified as gross receipts of the roofing business are
multiplied by the average net profit margin for roofing
contractors, producing a partial taxable income figure for the
roofing business. Added to this partial net income figure are
the unidentified bank deposits to calculate total taxable income
relating to the deposits to the checking account, one-half of
which is then charged to petitioner.
Bank Deposits Net Income
Identified as of Roofing
Gross Receipts Average Business on Unidentified One-half
of Roofing Net Profit Identified Bank Taxable Charged to
Year Business Margin Bank Deposits Deposits Income* Petitioner
1993 $490,009 20% $ 98,002 $ 17,727 $115,875 $57,938
1994 426,843 25% 106,711 51,061 157,939 78,970
1995 197,965 18% 35,634 133,369 169,032 84,516
* As indicated, also included in the taxable income for each year is interest
income relating to the checking account in the respective amounts of $146,
$167, and $29.
Under section 6651(f), an addition to tax of up to 75
percent applies where the failure to file a Federal income tax
return is due to fraudulent conduct. See DiLeo v. Commissioner,
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