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use of the bank deposits method to reconstruct his income for
1996 and 1997.
Petitioner contends that he had the following nontaxable
sources of income: Loans from his friends, brothers, or sister
of $1,600 on March 5, 1996, $4,500 on April 24, 1997, $3,800 on
June 18, 1997, $3,000 on June 20, 1997, and $3,000 on July 1,
1997.5 We disagree.
Petitioner has no promissory notes or records showing that
these amounts were loans or that he repaid them. He did not
identify specific individuals who lent him these amounts.
Petitioner’s testimony that these deposits were loans was vague
and uncorroborated. We are not convinced that the source of any
of the bank deposits respondent counted as unreported income for
petitioner in 1996 and 1997 was a nontaxable loan. We conclude
that petitioner had unreported income of $64,108.94 in 1996 and
$21,942.75 in 1997.
C. Whether Petitioner May Deduct More Business Expenses Than
Respondent Allowed for 1996 and 1997
Petitioner deducted more miscellaneous expenses related to
his Schedule C business than respondent allowed for 1996 and
5 Petitioner’s contention on brief differs slightly from
his contention at trial. On brief, he contended that deposits in
his bank accounts “that are large and end in ‘000', such as
$1,000.00, $3,000.00, and $5,000.00, are loan funds I received
from my family and friends.” At trial, he contended that bank
deposits of $1,000 or more were funds which were lent to him by
friends and family and then identified the five specific deposits
(shown above) as loans. He did not show that any of the deposits
respondent used to determine unreported income were loans.
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