Net-worth method
Definition
An indirect method of proving unreported income. The investigator establishes opening and closing net worth, adds known expenditures, subtracts documented income, and treats any unexplained surplus as taxable income. Used against Capone in 1931 and still a standard IRS technique.
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Explained in
- Scope and History of Forensic AccountingAn indirect method of proving unreported income. The investigator establishes opening and closing net worth, adds known expenditures, subtracts documented inco...