Kenneth Lee and Margaret Ihlenfeldt - Page 8

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          compute the taxpayer's income by any method that clearly reflects           
          income.  Meneguzzo v. Commissioner, 43 T.C. 824, 831 (1965).  A             
          bank deposits analysis has been accepted by the Courts as                   
          satisfying this legislative mandate.  Harper v. Commissioner, 54            
          T.C. 1121, 1129 (1970); Pao v. Commissioner, T.C. Memo. 1984-224.           
          The Commissioner's determination of tax liability, when                     
          calculated under a bank deposits analysis, is presumptively                 
          correct and places upon the taxpayer the burden of proving the              
          determination wrong.  Helvering v. Taylor, 293 U.S. 507 (1935);             
          Kearns v. Commissioner, 979 F.2d 1176, 1178 (6th Cir. 1992),                
          affg. T.C. Memo. 1991-320; Traficant v. Commissioner, 884 F.2d              
          258, 263 (6th Cir. 1989), affg. 89 T.C. 501 (1987); Calderone v.            
          United States, 799 F.2d 254, 258 (6th Cir. 1986).  A bank                   
          deposits analysis requires that all deposits in the bank be                 
          totaled and that adjustments be made to eliminate deposits that             
          reflect nontaxable items such as gifts and loans.  A taxpayer's             
          bank deposits, absent an explanation, are considered taxable                
          income.  Sindik v. Commissioner, T.C. Memo. 1996-47.                        
               Petitioner asserts that the unexplained deposits are                   
          nontaxable income.  According to petitioner, those deposits are             
          primarily the proceeds of loans which he received from financial            
          institutions, friends, and family.  We are unpersuaded that this            
          is so.  On the basis of our review of respondent’s analysis, in             
          the light of the record as a whole, we sustain respondent’s                 

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