David J. Edwards - Page 19




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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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