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respondent determined were sourced in receipts or income from her
law practice were from a nontaxable source. Petitioner testified
that in 1977 she received $60,000 as proceeds of a life insurance
policy in connection with her husband’s October 1976 death. She
further testified that she kept the $60,000 in a safe and used it
during 1986, 1990, and/or 1991 by making the deposits that
respondent considers unexplained and determined to be sourced in
petitioner’s law practice.
Respondent emphasizes that petitioner told respondent’s
examiner that there was no cash on hand as of the beginning of
1986. In the same vein, although petitioner contends that
insurance proceeds represented a cash hoard that could explain a
nontaxable source for the deposits, she testified as follows:
Oh, yes. I wanted to mention about my husband dying in
<76. I was flabbergasted when I discovered that,
purportedly, there was income that I had not reported.
And the only thing I can say is that somehow I
spent $60,000 between about 1977 and <87.
In addition, petitioner, in showing that she was not offsetting
her losses from her horse activity against her legal income,
explained that she had to borrow money to buy horses and pay
expenses of her horse activity. Petitioner’s borrowing at a time
when she purportedly possessed $60,000 in cash does not support
her claim that the alleged cash hoard existed 10 or more years
after she received it.
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