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an attempt to show omissions and errors in respondent’s
reconstruction for 1993. In that regard, the Commissioner’s
income reconstructions are subject to taxpayers’ showing
computation errors and omissions and/or errors in the
Commissioner’s methodology. See Webb v. Commissioner, 394 F.2d
366, 372-373 (5th Cir. 1968), affg. T.C. Memo. 1966-81.
Petitioner’s reconciliation, in great part, depends upon
nontaxable loan receipts in a total amount exceeding $466,000,
along with other nontaxable items that petitioner subtracted from
total deposits to arrive at reportable income. Respondent has
not countered petitioner’s showing of nontaxable items that would
reduce the total bank deposits to arrive at reportable income for
the 1993 year.
Accordingly, petitioner has shown that respondent’s approach
to reconstructing its 1993 gross receipts is flawed. We are
unable to draw any conclusion, as respondent apparently wishes us
to do, from the fact that we have found that petitioner
understated 1992 income. That is so because respondent’s
approach for 1992 was to identify specific items of omitted
income. Accordingly, we find that petitioner did not understate
its 1993 income by $74,046 as determined by respondent.
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