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733-1 was an account maintained by petitioner throughout 1987
into which petitioner deposited client fees as well as amounts
unrelated to her law practice. The deposits analysis purports to
add up all of the deposits made into the account during 1987 by
month, subtract identified nontaxable deposits from the computed
total deposits, and arrive at “Gross Revenues per the Audit”.
The analysis subtracts from that number the “Gross Revenues per
the Tax Return” to arrive at respondent’s revised income
adjustment.
Respondent’s calculation of total deposits as reflected on
the 1987 bank deposits analysis contains several obvious errors.
For example, for January and July, respondent erroneously listed
total deposits shown on the relevant bank statements. For March
and December, respondent did not have copies of the relevant bank
statements, so respondent used petitioner’s income listing from
her ledger book for those months.
When respondent’s calculation of nontaxable items is
compared to the relevant bank statements for account No. 302-733-
1, even more troublesome concerns arise. Petitioner had a “Ready
Cash” line of credit that, among other uses, covered overdrafts
on the account. Respondent treated some but not all of the
“Ready Cash” deposits during 1987 as nontaxable deposits.
Respondent also failed to subtract, as nontaxable deposits, a
$5,738 disbursement on a note (July 7, 1987), a $2,625.01
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