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1935); see also United States v. Abodeely, 801 F.2d 1020, 1023-
1025 (8th Cir. 1986); Caulfield v. Commissioner, T.C. Memo. 1993-
423, affd. 33 F.3d 991 (8th Cir. 1994). The bank deposits method
is often used in cases in which the taxpayer maintained
inadequate, incomplete, or unclear records. See, e.g., Holland
v. United States, 348 U.S. 121 (1954); 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).
In this case, petitioner produced records of her taxable
income, including her Schedule C income. The records included
handwritten ledger books as well as bank records such as bank
statements and deposit tickets. A review of petitioner’s income
records establishes to the Court’s satisfaction that the gross
income reported on petitioner’s Schedules C for 1987 and 1989 was
derived from petitioner’s handwritten ledger books and was not
calculated based on deposits into petitioner’s bank accounts.
The return preparer, Mr. Aunan, took the gross receipts numbers
that petitioner derived from her ledger books for the years at
issue and adjusted the numbers for any refunds made to
petitioner’s clients during the taxable years. In 1987 Mr. Aunan
made no adjustments to petitioner’s Schedule C gross receipts of
$75,097, but, in 1989, Mr. Aunan reduced the preliminary gross
receipts figure of $129,146 by client refunds of $470 and
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