-9-
that Mr. Paterson had gross income of $270,419.24, of which
$215,019 Mr. Paterson failed to report.
Respondent’s revenue agent Ms. Zamora (Revenue Agent Zamora)
was responsible for handling the determination of Mrs. Paterson’s
income. Revenue Agent Zamora used the bank deposits method to
reconstruct Mrs. Paterson’s income. Revenue Agent Zamora used
third-party procedures to obtain bank records and other
documents. Revenue Agent Zamora added together all the taxable
deposits into Mrs. Paterson’s various separate bank accounts and
subtracted the sources of income reported on the return. Revenue
Agent Zamora determined that for 1997, Mrs. Paterson had taxable
deposits of $170,579.41, of which $160,637.41 Mrs. Paterson
failed to report. For 1998, Revenue Agent Zamora determined that
Mrs. Paterson had taxable deposits of $63,343.42, of which
$61,832.42 Mrs. Paterson failed to report.
Respondent issued deficiency notices to petitioners for 1997
and 1998. The deficiency notices to Mr. Paterson were dated
April 1, 2004, with respect to 1997 and November 4, 2004, with
respect to 1998. The deficiency notice to Mrs. Paterson covered
both 1997 and 1998 and was dated April 1, 2004. Petitioners each
timely filed petitions. The cases were consolidated for purposes
of trial, briefing, and opinion.
OPINION
We are asked to decide whether petitioners, a longtime
bookmaker with a criminal history and his wife, failed to report
income in the amounts respondent determined. We are also asked
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: November 10, 2007