- 4 - determinations.2 There is no credible evidence to substantiate deductions (i.e., those relating to depreciation, insurance, interest, supplies, tax and licenses, travel, and other expenses) beyond those that respondent allowed in the notice of deficiency. In addition, we sustain respondent’s determinations relating to cost of goods sold. During the trial, pursuant to a stipulated agreement, the parties reduced the amount of unreported gross income in dispute. To determine petitioners’ unreported income, respondent conducted a bank deposits analysis. Bank deposits are prima facie evidence of income, Tokarski v. Commissioner, 87 T.C. 74, 77 (1986), and under the bank deposits method, all money deposited into a taxpayer’s bank account during a given period is assumed to be taxable income, DiLeo v. Commissioner, 96 T.C. 858, 868 (1991), affd. 959 F.2d 16 (2d Cir. 1992). Respondent’s determinations are presumed to be correct, and petitioners bear the burden of proving that respondent’s bank deposits analysis is erroneous. See Rule 142(a); Parks v. Commissioner, 94 T.C. 654, 658 (1990). Petitioners did not submit sufficient evidence to 2 Pursuant to sec. 7491(a), petitioners have the burden of proof unless they introduce credible evidence relating to the issue that would shift the burden to respondent. See Rule 142(a). Our conclusions, however, are based on a preponderance of the evidence, and thus the allocation of the burden of proof is immaterial. See Martin Ice Cream Co. v. Commissioner, 110 T.C. 189, 210 n.16 (1998).Page: Previous 1 2 3 4 5 NextLast modified: March 27, 2008