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of his or her income. Sec. 6001; sec. 1.6001-1(a), (e), Income
Tax Regs. In the absence of adequate books and records, the
Commissioner may reconstruct a taxpayer’s income by any
reasonable method. See sec. 446(b); Holland v. United States,
348 U.S. 121 (1954). The bank deposits method has long been
recognized as a reasonable method to reconstruct income where the
taxpayer’s records are inaccurate or incomplete. See Estate of
Mason v. Commissioner, 64 T.C. 651, 656 (1975), affd. 566 F.2d 2
(6th Cir. 1977). “Though not conclusive, bank deposits are prima
facie evidence of income.” Id. The Commissioner is not required
to show that all deposits constitute income and need not show a
likely source of that income. See id. at 657; Gemma v.
Commissioner, 46 T.C. 821, 833 (1966).
At trial, petitioner testified that the remaining
unidentified deposits totaling $10,393 were derived from
additional credit card cash advances and from earnings from
Merkle. However, petitioner presented absolutely no evidence to
corroborate his testimony. No credit card receipts or earning
statements were presented at trial. Petitioner testified that he
entered into many credit card cash advance transactions during
1994, but he could not estimate the amount. Further, petitioner
testified that he “couldn’t exactly say, nor * * * even guess
roughly” what his earnings may have been from Merkle for the year
at issue.
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