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$4,21313 to arrive at petitioner’s 1989 reported Schedule C gross
receipts of $124,463.
Respondent arbitrarily used entries from the 1987 and 1989
financial statements to substantially increase petitioner’s
Schedule C income in the notices of deficiency. When respondent
recognized the inherent weakness of his position, respondent
attempted to salvage his position that income adjustments were
warranted by arranging for the preparation of what purported to
be bank deposits analyses. The analyses, however, failed
adequately to adjust for nontaxable items, failed to analyze all
of petitioner’s bank accounts, and failed to adjust for all of
petitioner’s reported taxable income. Respondent did not obtain
and review all of petitioner’s bank records, including copies of
deposited items, and it is apparent from a review of the analyses
that respondent did not obtain the information necessary to
prepare a proper bank deposits analysis for either 1987 or 1989.
A review of respondent’s bank deposits analysis for 1987,
which was similar in method to the one for 1989, illustrates why
we assign no credibility to respondent’s bank deposits analyses
and related income determinations for 1987 and 1989. The 1987
bank deposits analysis is an analysis of one of petitioner’s bank
accounts that she used during that year. ANB account No. 302-
13Respondent has conceded that client refunds of $4,213.30
are deductible.
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