Lebloch

MEMORANDUM **

Taxpayers James LeBloch and Cathy Michelsen appeal the tax court’s decision finding them liable for deficiencies and penalties, entered after a bench trial. We “review decisions of the Tax Court under the same standards as civil bench trials in the district court.” Johanson v. Comm’r, 541 F.3d 973, 976 (9th Cir.2008) (internal quotation marks omitted). “Therefore, conclusions of law are reviewed de novo, and questions of fact are reviewed for clear error.” Id. (internal quotation marks omitted). We review the tax court’s management of the trial, including its decision to limit testimony, for abuse of discretion. See Pierce v. County of Orange, 526 F.3d 1190, 1199-1200 (9th Cir.2008).

1. The tax court justifiably permitted the Commissioner to reconstruct the taxpayers’ income using a bank deposit analysis. See Palmer v. U.S. IRS, 116 F.3d 1309 , 1312 (9th Cir.1997) (“Courts have long held that the IRS may rationally use statistics to reconstruct income where taxpayers fail to offer accurate records.”). The tax court found no credible evidence in the record that the taxpayers provided the Commissioner with adequate records in a timely manner. This factual finding is…