Court Accepts IRS's Reconstruction of Business Using Bank Deposits and Forms 1099K
In the case of Kahmann v. Commissioner, TC Summary Opinion 2017-35 the IRS was suspicious that the taxpayers had understated their gross income from their business for the year. Some of this suspicion arose because the taxpayers failed to turn over bank statements for the business to the agent when they were requested.
The agent was forced to issue summonses to banks where she was aware the taxpayers maintained at least three accounts. She obtained those accounts to be able to perform a bank deposits analysis, looking for unreported income.
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