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Commissioner’s use of the bank deposits method is not arbitrary
or capricious. Id. Bank deposits are prima facie evidence of
income. Id. In calculating a taxpayer’s taxable income, the
Commissioner must take into account any nontaxable source or
deductible expense of which he has knowledge. Id. at 645-646.
Generally the taxpayer bears the burden of proof. Rule
142(a)(1). The burden of proving facts relevant to the
deficiency may shift to the Commissioner under section 7491 if
the taxpayer establishes compliance with the requirements of
section 7491(a)(2)(A) and (B) by substantiating items,
maintaining required records, and fully cooperating with the
Secretary’s reasonable requests. Section 7491 also places the
burden of production upon the Secretary with respect to additions
to tax. Sec. 7491(c). Section 7491 is effective with respect to
court proceedings arising in connection with examinations by the
Commissioner commencing after July 22, 1998, the date of its
enactment by section 3001(a) of the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat.
685.
It is not clear from the record when respondent commenced
the examination of petitioner’s return; however, petitioner has
not alleged that section 7491 is applicable to this case. Even
if section 7491 were to apply, petitioner has not established
that he complied with the requirements of section 7491(a)(2)(A)
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