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reconstruct petitioner’s gross receipts from his law practice.
This method of proof is well established. DiLeo v. Commissioner,
supra at 867; Estate of Mason v. Commissioner, 64 T.C. 651, 656
(1975), affd. 566 F.2d 2 (6th Cir. 1977). Bank deposits are
prima facie evidence of income. Tokarski v. Commissioner, 87
T.C. 74, 77 (1986); Estate of Mason v. Commissioner, supra at
656-657. When using the bank deposits method, the Commissioner
is not required to show that each deposit or part thereof
constitutes income, Gemma v. Commissioner, 46 T.C. 821, 833
(1966), or prove a likely source, Clayton v. Commissioner, 102
T.C. 632, 645 (1994); Estate of Mason v. Commissioner, supra at
657. Unless the nontaxable nature of deposits is established,
gross income includes deposits to bank accounts where the
taxpayer has dominion and control of the funds. Commissioner v.
Glenshaw Glass Co., 348 U.S. 426, 431 (1955); Davis v. United
States, 226 F.2d 331, 334-335 (6th Cir. 1955); Manzoli v.
Commissioner, T.C. Memo. 1988-299, affd. 904 F.2d 101 (1st Cir.
1990). Respondent’s determination is presumed to be correct, and
petitioner bears the burden of proving otherwise.5 Rule 142(a).
A. Manila Accounts
Petitioner claims that Mr. Haynes was his client and that he
(petitioner) set up the Manila Accounts as an accommodation to
5 Sec. 7491 is inapplicable, as the audit in this case
started in 1994. Higbee v. Commissioner, 116 T.C. 438, 440
(2001).
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Last modified: May 25, 2011