- 13 -
Memo. 1997-275.
As discussed above, petitioner did not reasonably cooperate
with respondent, and she did not produce all documents within her
control (e.g., a bank statement from December 4 through 31,
1996). Accordingly, the burden of production as well as the
burden of proof with respect to this issue remains on petitioner.
Petitioner has not provided credible evidence substantiating
her position. For example, petitioner has not produced a bank
statement for the period December 4 through 31, 1996. We
conclude that the $12,589.55 reported on the Form 1099-MISC from
O’Brien is includable in petitioner’s gross income in 1996.
b. Bank Deposit Analysis
Generally, a taxpayer is required to maintain adequate books
and records of income. Sec. 6001; sec. 1.6001-1(a), Income Tax
Regs. The Commissioner is authorized to reconstruct a taxpayer’s
income by using any reasonable method that clearly reflects
income, including an indirect method, when a taxpayer has failed
to provide adequate records substantiating income. Sec. 446(b);
Holland v. United States, 348 U.S. 121 (1954); Clayton v.
Commissioner, 102 T.C. 632, 643 (1994). The Commissioner may use
bank deposit records to reconstruct a taxpayer’s income. Clayton
v. Commissioner, supra at 645. Bank deposits are prima facie
evidence of income, and the taxpayer has the burden of showing
that the determination is incorrect. Id. The Commissioner must
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