Fumbled Bank Deposit Analysis Sinks IRS’s Tax Determinations

The IRS incorrectly determined tax deficiencies and penalties against the former owner of several used car dealerships by conducting faulty bank deposit analysis as the business winded down, the US Tax Court said Monday.

Mohamad Nasser Aboui, the sole owner of HPPO Corp. Autoville Motors, challenged the IRS’s calculation that he had underreported HPPO’s income by $539,209 in 2016. The Tax Court ruled in Aboui’s favor that he had not, while also backing HPPO’s deductions for cost of goods sold, business expenses, bad debts, and real estate losses.

“We find that the IRS’s use of a bank deposit analysis to ...