- 6 - all surrounding facts and circumstances. See Giddio v. Commissioner, 54 T.C. 1530, 1533 (1970); Schroeder v. Commissioner, 40 T.C. 30, 33 (1963). Respondent determined that petitioners understated their income for 1988 by $515,993–-the total amount of cash and cashier’s checks petitioners received in their numerous bank transactions during the year. In arriving at this determination, respondent used the “specific-item” method to reconstruct petitioners’ income, relying on evidence of petitioners’ receipt of specific items of reportable income that did not appear on their income tax return. See United States v. Horton, 526 F.2d 884, 886 (5th Cir. 1976); Estate of Beck v. Commissioner, 56 T.C. 297, 353 (1971); Seidenfeld v. Commissioner, T.C. Memo. 1995-62. At trial, respondent produced clear and convincing evidence demonstrating that petitioners received $515,993. Respondent presented the checks, bearing petitioners’ endorsements, that petitioners either deposited or cashed in the transactions at issue. He also introduced the cash-out tickets from these transactions that bore petitioners’ names. Finally, respondent produced testimony from numerous Fidelity bank tellers and employees that it was Fidelity’s policy in 1988 to require customers to endorse checks that they presented to be cashed and that it was Fidelity’s policy to give the cash to the last person endorsing the check. They also testified that when they handedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
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