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Warren issued summonses to petitioner’s banks and obtained
petitioner’s 1996 and 1997 bank statements.
E. Respondent’s Determination
Warren performed a bank deposits analysis and characterized
each of petitioner’s 1996 and 1997 deposits as taxable or
nontaxable. She characterized the following as nontaxable:
Checks deposited by petitioner with insufficient funds; returned
deposits; loans from petitioner’s father; a $37.72 check from Air
Touch Cellular deposited on April 12, 1996; a $588.32 check from
Kelley Escrow deposited on August 7, 1996; a $25 check from AT&T
deposited on August 7, 1996; and a $560 redeposit made on August
19, 1997.
Respondent determined that petitioner received unreported
income of $118,413 in 1996 and $78,150 in 1997. Respondent
disallowed business expense deductions of $46,500 in 1996 and
$87,752 in 1997.
Respondent transferred petitioner’s case to Appeals Officer
Heidi Peterson (Peterson) in September 2000, after the petition
in this case was filed. In early October 2000, Peterson wrote to
petitioner to schedule a conference and to request information
and documents that Warren had previously requested. Shortly
before the date Peterson had proposed for the conference,
petitioner told Peterson that he did not have the requested
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