Robert E. and Yvonne R. Kovacevich - Page 7

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          determined deficiencies in the amounts of $18,232 and $13,074               
          relating to 1992 and 1994, respectively.  See Perlmutter v.                 
          Commissioner, 44 T.C. 382, 400 (1965)(holding that a valid notice           
          of deficiency indicates that the respondent has determined a                
          deficiency in tax in a definite amount for a particular taxable             
          year and intends to assess the tax in due course), affd. 373 F.2d           
          45 (10th Cir. 1967).  A notice of deficiency is not invalid for             
          failure to explain the adjustments or to cite statutory                     
          provisions on which respondent relied.  See, e.g., Henry Randolph           
          Consulting v. Commissioner, 113 T.C. 250, 253 (1999); Campbell v.           
          Commissioner, 90 T.C. 110 (1988); Mayerson v. Commissioner, 47              
          T.C. 340, 348-349 (1966); St. Paul Bottling Co. v. Commissioner,            
          34 T.C. 1137 (1960).  Accordingly, we reject petitioners’                   
          contention.                                                                 
          II. Unreported Income                                                       
               Petitioners contend that it was inappropriate for respondent           
          to use the “specific item” method to determine petitioners’                 
          deficiencies.  The “specific item” method is an indirect method             
          of income reconstruction, which consists of evidence of specific            
          amounts of income received by a taxpayer and not reported on the            
          taxpayer’s return.  Estate of Beck v. Commissioner, 56 T.C. 297,            
          361 (1971).  It is well settled that taxpayers are required to              
          report every item of income received and maintain records to                
          establish the correct amount of income, deductions, and credits             






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