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Cir. 1955); Estate of Beck v. Commissioner, 56 T.C. 297, 363
(1971); Otsuki v. Commissioner, 53 T.C. 96, 106 (1969).
2. Underpayment
Respondent contends that petitioner had an underpayment in
each of the years in issue. Respondent contends that respondent
has shown that the amounts deposited in petitioner’s bank
accounts (less nontaxable deposits) are greater than the amount
of petitioner’s costs of goods sold for each year in issue.
Petitioner stipulated to the amounts deposited in his bank
accounts in each year in issue. However, for reasons described
below, respondent had not shown by clear and convincing evidence
that petitioner had an underpayment for each year in issue.
If a taxpayer alleges that he or she had a nontaxable source
of income, respondent may satisfy the burden of proving that the
taxpayer had an underpayment by disproving that nontaxable
source. United States v. Massei, 355 U.S. 595 (1958). As
discussed at paragraph B-1, above, petitioner contends that
$132,000 of Ms. Shaw’s gross receipts in 1993 was deposited in
his bank accounts in 1993. Respondent contends that no more than
$38,834 of gross receipts from Ms. Shaw’s business was deposited
in petitioner’s bank accounts in 1993. However, respondent has
not proved that no more than $38,834 of receipts from Ms. Shaw’s
business was deposited in petitioner’s bank accounts in 1993.
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