- 19 -
74, 77 (1986)(citing Estate of Mason v. Commissioner, supra at
656-657).
“The bank deposits method assumes that all money deposited
in a taxpayer’s bank account during a given period constitutes
taxable income, but the Government must take into account any
nontaxable source or deductible expense of which it has
knowledge.” Clayton v. Commissioner, 102 T.C. 632, 645-646
(1994). “When a taxpayer keeps no books or records, has large
bank deposits, and offers no plausible explanation of such
deposits, the Commissioner is not arbitrary or capricious in
resorting to the bank deposit method for computing income.”
Estate of Mason v. Commissioner, supra at 657.
At trial, Mr. Johnson thoroughly explained the method used
to reconstruct petitioner’s income for 1999 and 2000.
Mr. Johnson reviewed each of the bank deposits to determine
whether the deposit was from a taxable or nontaxable source.
Petitioner did not offer into evidence any books, records, or
receipts on her behalf, nor did she offer any evidence
challenging respondent’s income calculations.
C. Final Partnership Administrative Adjustment
Petitioner argues that any 1999 or 2000 LLC income cannot be
attributed to her because respondent did not issue Miroyal or
National Land Bank an FPAA before issuing her notice of
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