-22-
Commissioner, 121 T.C. 273, 275 (2003). In fact, we find from
the record that petitioners did not cooperate with such
reasonable requests by respondent during the course of the audit.
We hold that petitioners bear the burden of proof.
B. Unreported Income
Gross income includes all income from whatever source
derived, sec. 61(a), and taxpayers are required to keep books and
records sufficient to establish their Federal income tax
liability, see sec. 6001; see also sec. 1.6001-1(b), Income Tax
Regs. Where taxpayers have not maintained adequate business
records to establish such liability, the Commissioner may
reconstruct income by any method that the Commissioner believes
reflects income clearly. See sec. 446(b); Parks v. Commissioner,
94 T.C. 654, 658 (1990). The Commissioner’s method need not be
exact; however, it must be reasonable. See Holland v. United
States, 348 U.S. 121 (1954).
The bank deposits method for computing unreported income has
long been sanctioned by the judiciary. See Factor v.
Commissioner, 281 F.2d 100, 116 (9th Cir. 1960), affg. T.C. Memo.
1958-94; DiLeo v. Commissioner, 96 T.C. 858, 867 (1991), affd.
959 F.2d 16 (2d Cir. 1992). Bank deposits are prima facie
evidence of income. See Tokarski v. Commissioner, 87 T.C. 74, 77
(1986). Where an individual taxpayer has failed to maintain
adequate records as to the amount and source of his or her income
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