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owed $4,000 or $5,000. She then testified that she owed $400 at
the end of 2003, changed that to testify that she currently owes
$400, and then claimed that she paid back $4,000 in 2003 and owed
$2,000 at the end of 2003.
Even if the Court were to accept at face value the testimony
of Mrs. Runels and Ms. Edar about the existence of the loan, the
record provides no basis on which to attribute any particular
amount to 2002 or 2003 as having been repaid or deposited into
petitioners’ accounts. Respondent’s determination of unreported
gross receipts for 2002, as revised, is sustained.
2003
The cash T analysis is performed by setting up a table with
income items (debits) on the left side of the “T” account and
expenses (credits) on the right side of the “T” account. See,
e.g., Owens v. Commissioner, T.C. Memo. 2001-143. Its purpose is
“to measure a taxpayer’s reported income against personal
expenditures to determine whether more was spent than was
reported.” Rifkin v. Commissioner, T.C. Memo. 1998-180, affd.
without published opinion 225 F.3d 663 (9th Cir. 2000). The
implication is that the excess of expenditures over reported
income represents unreported income. Id.
Petitioners failed to respond to requests from the TCO for
information for 2003 during the examination, and respondent,
using the cash T analysis, determined that petitioners had
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