- 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 mustPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011