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After petitioner filed his amended 1989 and 1990 returns and
his original 1991 return, respondent was forced to summons
petitioner’s records to verify the income and deductions reported
by petitioner. The summonsed records generally did not agree
with petitioner’s tax returns. In addition, records provided by
petitioner to respondent’s agent were not properly organized or
categorized. Petitioner’s 1990 records contained duplications
and personal expense receipts. Due to the discrepancies and poor
records, respondent’s agent reconstructed petitioner’s 1990
income by means of a bank deposit analysis. Petitioner’s
deductions were determined by means of analyzing the records
summonsed and provided by petitioner.
Respondent’s bank deposits reconstruction of petitioner’s
income revealed that petitioner had unexplained deposits which
petitioner omitted from his original 1990 return. Respondent’s
determination for petitioner’s 1990 income was that he failed to
report specific identified gross receipts of $17,572 from
Medicaid administrative fees and $129,136 from taxi leasing.
Respondent’s agent was able to verify $127,879 of
petitioner’s claimed deductions of $211,875 for 1990. With
respect to 1991, respondent’s agent was able to verify $112,023
of the $254,787 petitioner claimed as business deductions. After
the petition was filed, based on petitioner’s further
substantiation, respondent allowed an additional $45,184 in taxi
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Last modified: May 25, 2011