Mark N. Wright and Erica Y. Wright - Page 25

                                       - 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  Next

Last modified: May 25, 2011