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Michalowski v. Commissioner, T.C. Memo. 1976-192 (and cases cited
therein). Under section 7491(a), the burden of proof does not
shift to petitioner. See supra note 2. Moreover, in Tokarski v.
Commissioner, 87 T.C. 74 (1986), this Court held that, where a
taxpayer is in receipt of bank deposits, respondent does not have
the burden of going forward with evidence linking the taxpayer to
an income-producing activity as a precondition to requiring the
taxpayer to satisfy his burden of proof. Thus, the burden of
showing error in the bank deposits analysis is on the taxpayer.
Respondent’s agent made an exhaustive review of bank records
to arrive at a determination of petitioner’s income. The audit
included contacts with numerous businesses that had utilized the
services of Omnitec. None of these businesses had any reason to
believe that the services provided to them were other than the
services of Omnitec Missouri. Respondent’s use of this indirect
method of income determination was warranted in light of the
refusal of Mr. Lammert, an officer of Omnitec Missouri, to
cooperate in the audit by providing books and records to show the
income and expenses of Omnitec Missouri or to show that the
activity conducted under the names of Omnitec Corp. and Omnitec,
Inc., was an activity of Omnitec Nevada. The agent concluded
that the activity was an activity of Omnitec Missouri and
calculated the income and allowable expenses leading to the
determination of the deficiencies. No evidence was presented to
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