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Tokarski v. Commissioner, 87 T.C. 74, 77 (1986) (citing Estate of
Mason v. Commissioner, supra at 656-657).
Respondent has introduced adequate evidence to show that
petitioner received unreported income during 1999, 2000, and
2001. With regard to respondent’s determinations that resulted
from respondent’s bank deposit analyses, respondent is not
required to show a link between petitioner’s bank deposits and a
likely taxable source of income. See, e.g., Tokarski v.
Commissioner, supra; Kudo v. Commissioner, T.C. Memo. 1998-404,
affd. 11 Fed. Appx. 864 (9th Cir. 2001). Respondent’s
determinations regarding the cashier’s check and petitioner’s
cash income are founded on statements from third parties such as
banks and brokerage firms, and on petitioner’s admissions that
she received cash income that she failed to report on her tax
returns. Moreover, petitioner’s nail salon business clearly
qualifies as an income-producing activity. See, e.g., Hamilton
v. Commissioner, T.C. Memo. 2004-66 (ownership of interests in
businesses sufficient to prove likely source of unreported
income). Respondent has therefore introduced adequate
substantive evidence to show that petitioner received unreported
income in the amounts determined, and, as noted supra, the burden
of proof falls on petitioner to demonstrate that respondent’s
determinations are arbitrary or erroneous.
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