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Kling v. Commissioner, T.C. Memo. 2001-78 (“Absent some
explanation, a taxpayer's bank deposits represent taxable income.
* * * The taxpayer has the burden of proving that the bank
deposits came from a nontaxable source.”). Respondent made a
prima facie case by identifying deposits to petitioner’s
accounts. It was therefore incumbent upon petitioner to show a
nontaxable source for the deposits.
Petitioner failed to offer credible evidence to show that
any of the deposits respondent identified in his bank deposits
analysis were from nontaxable sources. Petitioner’s tax adviser,
Catherine Carroll (Carroll),5 offered into evidence the front of
a check in the amount of $10,892.11. Carroll claimed that the
check had been deposited to one of petitioner’s accounts and had
4(...continued)
cooperated with reasonable requests by the Secretary for
witnesses, information, documents, meetings, and interviews”.
Sec. 7491(a)(2)(B). Petitioner did not maintain proper books and
records as required by the regulations and did not cooperate with
respondent’s reasonable requests for information and documents
during the examination. Because petitioner did not satisfy the
conditions of sec. 7491(a), he bears the burden of proof with
respect to the income tax deficiencies respondent determined.
5Petitioner hired Carroll to provide forensic accounting
services and expert testimony in connection with this case. She
was not involved in the creation of petitioner’s trusts nor in
the preparation of petitioner’s and the trusts’ original Federal
income tax returns. At trial, Carroll did submit on behalf of
petitioner and the trusts amended Federal income tax returns.
Because respondent claimed from the beginning, and petitioner has
now conceded, that all trust items are taxable to petitioner, the
trust returns and proposed amendments are nullities. Throughout
this opinion we will refer to Carroll as petitioner’s “tax
adviser”.
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