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During the years at issue, petitioner maintained banking
relationships with at least two financial institutions–-ANB at
which petitioner maintained two checking accounts (Nos. 302-733-1
and 109-070-3), a payroll account (No. 109-139-6), and several
personal and commercial loan accounts; and First Bank at which
she maintained a checking account (No. 2624676067).6
IV. Respondent’s Review of Petitioner’s Business Records
Although petitioner produced her business records (ledger
books, checks, cash receipts, credit card receipts, credit card
statements, and other documents) to the revenue agent in
connection with the examination of her returns for 1987-90, the
revenue agent failed to examine and/or utilize petitioner’s
records for 1987, 1989, and 1990 to ascertain the accuracy of the
income and expenses claimed on petitioner’s Schedules C for those
years. With the possible exception of 1988, for which a portion
of petitioner’s Schedule C deductions was allowed, respondent
issued the notices of deficiency without examining petitioner’s
business records.
A. Schedule C Income
Sometime after respondent issued the notices of deficiency,
respondent undertook to reconstruct petitioner’s Schedule C
6The record does not disclose when the accounts were opened
and does not include complete records for the accounts.
Petitioner also maintained other financial accounts during the
years at issue, but the record contains minimal information
concerning them.
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