-23-
and the Commissioner has determined that the deposits are income,
the burden is on the taxpayer to show that the Commissioner’s
determination is incorrect.
Petitioners argue that respondent’s use of the bank deposits
analyses was unjustified because, they state, they kept adequate
records establishing their income. We disagree. While
petitioners may have used a computer program to memorialize their
income and expenses, we are unable to find from credible evidence
in the record that petitioners ever gave to respondent, before
issuance of the notices of deficiency, adequate records to
support their reported income for any subject year. On the basis
of the record at hand, we hold that respondent’s use of the bank
deposits analyses was proper.
Petitioners argue alternatively that respondent misapplied
the bank deposits analyses in that, they argue, respondent failed
to recognize that most of the disputed deposits arose from
nontaxable sources. Petitioners argue that respondent’s bank
deposits analyses should be adjusted as follows:
1997
Petitioners’
As Additional As
Determined Adjustments Adjusted
Total deposits (including interest) $1,087,054 -0- $1,087,054.00
Less adjustments:
Interaccount transfers 293,008 $15,599.29 308,607.29
Loan receipts 22,600 -0- 22,600.00
Loan repayments -0- 35,000.00 35,000.00
VISA advances 21,750 2,500.00 24,250.00
Sales tax remittances 32,255 3,800.00 36,055.00
Returned deposits 1,387 -0- 1,387.00
Expense report reimbursement -0- 6,414.04 6,414.04
Total 371,000 63,313.33 434,313.33
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Last modified: November 10, 2007