Cash Expenditures Method

Cash Expenditures Method means:
an indirect approach used by the U.S. Internal Revenue Service to reconstruct income when the agency suspects underreporting or unreported income. The U.S. Internal Revenue Service (IRS) determines cash expenditures during a given period and questions the source of income. If expenditures exceed income without an explanation of the source of income, the U.S. Internal Revenue Service (IRS) asserts that the difference is taxable income.