-3-
1995 return that the business income consisted of $12,000
received by William McDermott (Mr. McDermott) and $18,000
received by Donna McDermott (Ms. McDermott). During 1995, Mr.
McDermott was an independent contractor who bought and sold
educational textbooks as the manager of Omega Resources LLC
(Omega). He generally works for Omega throughout the United
States, and it reimburses him for his out-of-pocket traveling
expenses. Ms. McDermott also worked for Omega during that year
as an independent contractor. She has an undergraduate degree in
teaching and a master’s degree in the healing arts (the study of
alternative medicine), and she worked for Omega counseling
individuals on their personal problems.
During 1995, petitioners had a regular checking account at
First Interstate Bank (FIB), two valuechecking accounts at Bank
One, and a securities account at Prudential Securities. When
respondent audited petitioners’ 1995 return, respondent performed
a bank account analysis on these four accounts and determined in
the notice of deficiency that the following 23 deposits into the
FIB and Bank One accounts were includable in petitioners’ 1995
gross income:
Date of Deposit Amount
Jan. 18 $1,375
Apr. 7 150
May 10 93
May 10 475
May 10 151
May 10 156
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Last modified: May 25, 2011