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without published opinion 827 F.2d 774 (11th Cir. 1987).
Petitioners deposited millions of dollars in their bank accounts
while reporting losses from cash-intensive businesses. We
conclude that respondent’s deficiency determination was not
arbitrary. Accordingly, the presumption of correctness applies.
Petitioners, however, have established that the funds
attributed to petitioners by respondent’s income reconstruction
were from nontaxable sources. Petitioners and their witnesses,
particularly Mr. Tandiono and Mr. Latief, adequately explained
the sources, nature, and amounts of the transfers to petitioners.
The funds, transferred from Mr. Tandiono and Mr. Latief to
petitioners, were gifts. See Commissioner v. Duberstein, 363
U.S. 278, 285 (1960). Mr. Tandiono’s and Mr. Latief’s
disinterested generosity was inspired by their gratitude towards
petitioners’ father, Reverend Park, who led Mr. Tandiono and Mr.
Latief to Christianity. Family members also sent funds to
petitioners as gifts. Respondent failed to present any rebuttal
evidence and chose instead to rely solely on the contention that
petitioners, their witnesses, and their explanations were not
credible. To the contrary, petitioners’ testimony, and that of
their witnesses, was credible. We conclude that there is no
deficiency in income tax, nor section 6662(a) penalty relating to
this issue.
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