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TAX MATTERS

checks; and loans, gifts, inheritances, Partnership real estate rental income plummeted in 2020
or assets on hand at the beginning of (dollar amounts are in thousands) Percentage
the tax period. 2019 2020 change
Holding: The court held that Total net income $760,646,448 $760,252,861 -0.1%
the IRS properly performed its bank
Net rental real estate income (loss) -$8,808,487 -$36,658,977 -316.2%
deposits analysis and sustained the
IRS’s determination of $102,885
Source: “Partnership Returns, Tax Year 2020,” Statistics of Income Bulletin, Fall 2022, Figure E.
of additional unreported income
for 2013.
Showalter’s sole contention was
that, in using a bank deposits analysis, properly subtracted from RECS’s bank Johnson College of Business; Matthew
the IRS did not consider the nontax- deposits, the court held. Thus, the Geiszler, Ph.D., is a lecturer in account-
able real estate transaction. However, IRS’s calculation of the Showalters’ ing within the College of Human Ecol-
the IRS, when conducting its analysis additional unreported income was ogy; and Marquise Riley, CPA, MPS, is
of the account, subpoenaed the closing correct. a lecturer in accounting within the SC
documents from the sale on Aug. ■ Showalter, T.C. Memo. 2022-114 Johnson College of Business, all at Cornell
6, 2013, which showed cash due to University in Ithaca, N.Y.
Showalter of $95,002. This amount — John McKinley, CPA, CGMA, J.D.,
matched exactly a deposit made to LL.M., is a professor of the practice in To comment on this column, contact Paul
RECS’s account, which the IRS accounting and taxation within the SC Bonner, the JofA’s tax editor. ■

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