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show that the determination is incorrect. See Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933).
In calculating petitioner’s income using the bank deposits
method, respondent considered deposits to the Business Account
and made a downward adjustment for any withdrawals from the Trust
Accounts that were deposited to the Business Account in order to
prevent duplication.8 Respondent’s method of computing
petitioner’s law practice income insured that petitioner was not
taxed on receipts that constituted loan proceeds or other
nontaxable receipts by eliminating such deposits from the
computation. Respondent’s method further insured that petitioner
was not taxed twice on receipts that were properly reportable at
places on petitioner’s returns other than on the law practice
Schedule C.
Petitioner admitted both in his pleadings and during trial
that some income had been unreported. In all of the tax years at
issue, there were discrepancies between what was deposited into
petitioner’s Business Account and what was reported as gross
receipts on petitioner’s tax returns. During 1987, 1988, 1989,
and 1990, the amounts of gross deposits to the Business Account
were $331,575, $367,895, $505,464, and $1,135,338, respectively.
8 For example, in 1988 respondent made a $749,227 upward
adjustment to petitioner’s 1988 income for certain withdrawals
from the Trust Accounts. That adjustment, however, was offset by
two downward adjustments: One in the amount of $202,266 for
interaccount transfers and one in the amount of $185,992 for
repayments to the Trust Accounts.
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