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$30,614.62. This figure is $13,437.62 more than that reported by
petitioner on her return.
Petitioner objects to respondent’s reconstruction of her
gross income on the basis that respondent failed to account for
additional deposits of nontaxable income. First, petitioner
contends that respondent failed to subtract from the total gross
receipts figure the proceeds of a $5,000 car loan, as well as an
additional $5,000 representing the proceeds of a loan from a
friend. Respondent concedes that these amounts do not constitute
taxable income. Nonetheless, respondent does not reduce gross
receipts by these amounts because the proceeds of the two loans
were initially deposited to savings account 355 (a fact confirmed
by the bank statements introduced into evidence by petitioner).
Since the beginning gross receipts figure included only deposits
to petitioner’s checking accounts, there is no reason to reduce
that figure on account of deposits of nontaxable income to
petitioner’s savings accounts. To the extent the loan proceeds
were transferred to petitioner’s checking accounts, they were
considered by respondent through the reduction for interaccount
transfers. We agree with respondent that the gross receipts
figure which respondent determined should not be reduced by the
$10,000 in loan proceeds.
Second, petitioner contends that the gross receipts figure
should be reduced by $3,002.07 on account of nontaxable gifts
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