- 25 -
accrue such a deduction under the all events test.22 See
Hallmark Cards Inc. v. Commissioner, supra at 34; United States
v. Gen. Dynamic Corp., supra at 243-244. Therefore, neither Mr.
Wright nor Wright & Associates was entitled to deduct $50,000 for
1999 in respect of Ms. Mohr’s NASD claim. Accordingly, the Court
sustains respondent’s $50,000 adjustment to petitioners’ taxable
income for 1999.
III. Offshore Accounts and Credit Card
A. Bank Deposits Method
A bank deposit is prima facie evidence of income, and the
Commissioner is not required to show a likely source of that
income. Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). The
taxpayer bears the burden of showing that respondent’s
determination is incorrect. Rule 142(a); Estate of Mason v.
Commissioner, 64 T.C. 651, 657 (1975), affd. 566 F.2d 2 (6th Cir.
1977). “The bank deposits method assumes that all money
deposited in a taxpayer’s bank account during a given period
constitutes taxable income, but the Government must take into
account any nontaxable source or deductible expense of which it
has knowledge.” Clayton v. Commissioner, 102 T.C. 632, 645-646
22No economic performance, within the meaning of sec.
461(h)(2)(C) and the regulations thereunder, occurred with
respect to the alleged liability during any year in issue. Also,
no transfer was made such as would entitle Mr. Wright or Wright &
Associates to accrue a contested liability under sec. 461(f).
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011