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elaborate on his observations.
On the record as developed, petitioner has not offered
sufficient evidence to show that respondent’s determinations of
petitioner’s unreported Schedule C taxable income were in error.
We therefore sustain respondent’s determinations concerning
petitioner’s Schedule C taxable income for the years 1982 through
1987.
B. Schedule C Deductions
Section 162(a) provides a deduction for ordinary and
necessary expenses that a taxpayer pays or incurs during the
taxable year in carrying on a trade or business (Schedule C
expenses).10 When using the bank deposits method to determine
taxable income, the Commissioner must take into account any
deductible expenses, including Schedule C expenses, of which the
Commissioner has knowledge. DiLeo v. Commissioner, 96 T.C. 858,
872 (1991), affd. 959 F.2d 16 (2d Cir. 1992). If a taxpayer
claims any deductible expenses that the Commissioner did not
allow, the taxpayer must prove their existence. Id.
On the basis of the examination of petitioner’s personal
bank accounts, respondent concluded that petitioner had Schedule
C expenses of $25,065 in 1982, $4,001 in 1983, zero in 1984 and
10Respondent does not question whether petitioner engaged in
a trade or business during the years at issue.
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