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2. Carey Schedule C-–Omission of Gross Receipts
Respondent has adjusted the gross receipts shown on the
Carey Schedule C by adding thereto $9,886. In their reply brief,
the Careys concede that adjustment to the extent of $6,253. They
argue that the remaining amount of the adjustment, $3,633, is not
taxable to them in 1995 because, although that amount was
received by them in 1995, it was not deposited into their bank
account until 1996. Michael elected the cash method of
accounting to report income from Rancho and Sunshine. Checks are
income to a cash method taxpayer in the year of receipt, not in
the year of deposit. See Lavery v. Commissioner, 158 F.2d 859
(7th Cir. 1946), affg. 5 T.C. 1283 (1945); Friscia Constr., Inc.
v. Commissioner, T.C. Memo. 2000-192. We sustain respondent’s
adjustment in full.
3. Carey Schedule C-–Disallowance of Deductions
Respondent has adjusted the net profit shown on the Carey
Schedule C by disallowing all of the expenses that the Careys
claimed in determining that net profit. Respondent explained his
adjustment by stating that the Careys had failed to establish
5(...continued)
Commissioner, 85 T.C. 731, 742-743 (1985); see also Norgaard v.
Commissioner, 939 F.2d 874, 879 (9th Cir. 1991), affg. in part
and revg. in part T.C. Memo. 1989-390. Because the record
contains no evidence upon which we could base such an estimate,
we could not allow the Careys any deductions even were we to
conclude that they had asked us to do so.
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