- 25 -
reconstruct petitioner’s gross receipts from the law firm. The
specific items method is a direct method of proof, and it has
been approved by this Court. See Schooler v. Commissioner, 68
T.C. 867 (1977); Schaaf v. Commissioner, T.C. Memo. 1991-530.
The bank deposits method of proof is well established. DiLeo v.
Commissioner, 96 T.C. 858, 867 (1991), affd. 959 F.2d 16 (2d Cir.
1992); Estate of Mason v. Commissioner, 64 T.C. 651, 656 (1975),
affd. 566 F.2d 2 (6th Cir. 1977).
Bank deposits are prima facie evidence of income. Tokarski
v. Commissioner, supra at 77; Estate of Mason v. Commissioner,
supra at 656-657. When using the bank deposits method, the
Commissioner is not required to show that each deposit or part
thereof constitutes income, Gemma v. Commissioner, 46 T.C. 821,
833 (1966), or prove a likely source, Clayton v. Commissioner,
102 T.C. 632, 645 (1994); Estate of Mason v. Commissioner,
supra at 657. Unless the nontaxable nature of deposits is
established, gross income includes deposits to bank accounts
where the taxpayer has dominion and control of the funds.
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955);
Davis v. United States, 226 F.2d 331, 334-335 (6th Cir. 1955);
Manzoli v. Commissioner, T.C. Memo. 1988-299, affd. 904 F.2d 101
(1st Cir. 1990).
Respondent determined, via a bank deposit analysis, that the
amounts reported by petitioner as law firm income on her returns
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011