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1989 1990
Unreported income $111,991 $11,747
Personal exemption deduction (2,000) (2,050)
Standard deduction (2,600) (2,725)
Self-employment income tax deduction -0- (830)
Taxable income 107,391 6,142
Income tax 31,556 919
Self-employment income tax 6,250 1,660
Total tax liability (deficiency) 37,806 2,579
Respondent determined the total amounts of unreported income by
analyzing petitioner’s cash transactions during the years in
issue. The notice of deficiency reflects the following
reconstruction of petitioner’s income:
1989 1990
Cash bank deposits $64,166 $6,415
Cash wires 13,110 500
Cashier’s checks 820 -0-
Money orders 4,504 2,831
Cash expenditures
1987 Hyundai 4,725 -0-
1989 Hyundai 4,322 -0-
Refrigerator 1,606 -0-
Home improvements 5,900 -0-
Underground sprinkler 3,400 -0-
New sod 2,600 -0-
Security system 3,637 -0-
Mercedes downpayment 13,000 -0-
Tennis bracelet 3,200 -0-
Attorney fees -0- 2,000
Total cash transactions 124,990 11,746
Less duplicated items (13,000) -0-
Total income 111,990 11,746
In addition to the deficiencies, respondent determined that
petitioner was liable for additions to tax under section
6651(a)(1) and section 6654(a). For both of the years in issue,
respondent based his determination of petitioner’s liability for
the section 6654(a) addition to tax on a required annual payment
of 90 percent of petitioner’s current year tax liability as
determined in the notice of deficiency.
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