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respectively, in the amounts of $28,517.92, $41,509.00, and
$30,649.00.
If a taxpayer does not maintain adequate books and records,
the Commissioner may reconstruct the taxpayer's income by any
reasonable method which clearly reflects income. Sec. 446(b);
Holland v. United States, 348 U.S. 121, 130-132 (1954); Caulfield
v. Commissioner, 33 F.3d 991, 992-993 (8th Cir. 1994), affg. T.C.
Memo. 1993-423. The bank deposits and cash expenditures method
is a rational way to reconstruct income. See Caulfield v.
Commissioner, supra at 993; Parks v. Commissioner, supra at 658;
Estate of Mason v. Commissioner, 64 T.C. 651, 656 (1975), affd.
566 F.2d 2 (6th Cir. 1977).
Respondent asserts that Beck's Liquors underreported its
income by $123,527 for 1991, $102,605 for 1992, and $126,460 for
1993.
A. Gross Receipts of Beck's Liquors
Respondent determined unreported gross receipts of Beck's
Liquors totaling $74,453 for 1991, $115,133 for 1992, and $84,782
for 1993.
1. State Bank Deposits
Petitioners do not dispute the amounts of the State Bank
deposits. Bank deposits are prima facie evidence of income.
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986); Estate of Mason
v. Commissioner, supra at 656-657.
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