- 7 -
Respondent disallowed the balance of the claimed Schedule A
itemized deductions relating to job expenses.
Petitioners filed their 1993 joint Federal income tax return
on November 9, 1994, almost 7 months late.
OPINION
Generally, respondent’s deficiency determinations are
presumed correct, and the burden of proof is on taxpayers to show
that respondent’s determinations are incorrect.1 Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Taxpayers are
expected to keep adequate records reflecting their income and
expenses. Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.
Where taxpayers fail to maintain adequate books and records,
respondent is allowed to reconstruct the taxpayers’ income by any
reasonable method. Sec. 446(b); Erickson v. Commissioner, 937
F.2d 1548, 1553 (10th Cir. 1991), affg. T.C. Memo. 1989-552;
Parks v. Commissioner, 94 T.C. 654, 658 (1990).
DUI’s Gross Income
The bank deposits method has long been sustained by the
courts as a means of computing unreported income. Clayton v.
Commissioner, 102 T.C. 632, 645 (1994); DiLeo v. Commissioner, 96
1 Respondent’s examination of petitioners’ 1992 and 1993
joint Federal income tax returns began in 1996. Accordingly, the
shift in the burden of proof or of production that is available
in some circumstances under sec. 7491 is not applicable.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011