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the deposits respondent identified as taxable income. Under
these circumstances, we do not accept Carroll’s bank deposits
analysis.
On brief, respondent states that his revised bank deposits
analysis fixes petitioner’s unreported income for 1996 as
$54,516, rather than $170,619. We sustain respondent’s
concession to this effect.
Petitioner’s Right to Schedule C Deductions and Cost of Goods
Sold in 1996 of $278,365
Because petitioner provided no documentation to substantiate
deductions, respondent disallowed all deductions petitioner
claimed. During discovery in this case, petitioner finally
provided documentation to substantiate some of his business
expense deductions. On the basis of the documentation petitioner
provided during this case, respondent allowed $280,195 of the
$574,430 in business expense deductions and cost of goods sold
petitioner claimed for 1996 and $426,551 of the $619,094 in
business expense deductions petitioner claimed for 1997.
Petitioner conceded the balance he claimed for 1997 but has not
conceded the balance claimed for 1996. We must therefore decide
whether petitioner has substantiated any business expense
deductions and cost of goods sold for 1996 in excess of the
amount allowed by respondent.
Taxpayers who dispute the Commissioner’s disallowance of
deductions claimed on their returns must show they satisfied the
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