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$104,239 in 1996. From the unexplained bank deposits respondent
deducted the following amounts that were not includable in
petitioner’s income:
Unexplained bank deposits $104,239
Income tax refund checks $21,726
1997 receipts 2,000
Examiner error 1,624
Currency transactions 39,445
Total 64,795
Underreported income 39,444
Petitioner’s position is that the currency exchanges are
“net transactions” and that the money he received is not income
to him because he acted as a conduit for Mr. Emmanuel.
Gross income means all income from whatever source derived.
Sec. 61. When a taxpayer fails to provide adequate records
substantiating income, the Commissioner is authorized to
reconstruct the taxpayer’s income by using any reasonable method
that clearly reflects income, including an indirect method. Sec.
446(b); Holland v. United States, 348 U.S. 121 (1954). The
reconstruction need only be reasonable in light of all facts and
circumstances. Clayton v. Commissioner, 102 T.C. 632, 643
(1994); Giddio v. Commissioner, 54 T.C. 1530, 1532 (1970).
The Commissioner is authorized to use bank deposit records
to reconstruct a taxpayer’s income. Clayton v. Commissioner,
supra at 645 (citing DiLeo v. Commissioner, 96 T.C. 858, 867
(1991), affd. 959 F.2d 16 (2d Cir. 1992)). When a taxpayer keeps
no books or records and has large bank deposits, the
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