- 11 -
Court finds that petitioner’s procedural due process rights were
not violated when respondent failed to provide him and Mr.
Townshend a notice of by-pass or a 30-day letter. Rosenberg v.
Commissioner, 450 F.2d 529, 532-533 (10th Cir. 1971), affg. T.C.
Memo. 1970-201. For the foregoing reasons, the Court finds the
notice of deficiency is valid, and the burden of proof does not
shift to respondent.
B. The Bank Deposits Method of Income Reconstruction
Petitioner contends that respondent’s use of the bank
deposits method to reconstruct his taxable income for 2000 was
arbitrary and unreasonable.
When a taxpayer fails to maintain or produce adequate books
and records, the Commissioner is authorized under section 446 to
compute the taxpayer’s taxable income by any method which clearly
reflects income. Holland v. United States, 348 U.S. 121, 130-132
(1954); Meneguzzo v. Commissioner, 43 T.C. 824, 831 (1965);
Sutherland v. Commissioner, 32 T.C. 862, 866-867 (1959). The
Commissioner has great latitude in selecting a method for
reconstructing a taxpayer’s income, and the method need only be
reasonable in the light of all the surrounding circumstances.
This Court has long accepted the bank deposits method of
income reconstruction. Nicholas v. Commissioner, 70 T.C. 1057,
1064-1065 (1978); Estate of Mason v. Commissioner, 64 T.C. 651,
656-657 (1975), affd. 566 F.2d 2 (6th Cir. 1977). While not
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: November 10, 2007