- 17 -
him. Liddy v. Commissioner, 808 F.2d 312, 314 (4th Cir. 1986),
affg. T.C. Memo. 1985-107. The money that a taxpayer, acting as
a conduit, must transmit to someone else is not income. Diamond
v. Commissioner, 56 T.C. 530, 541 (1971), affd. 492 F.2d 286 (7th
Cir. 1974).
If petitioner had been holding the proceeds under Caplan's
direction for the benefit of the dealership, then such funds
would not be income to petitioner. However, petitioner has not
presented any evidence as to the disposition of any of these car
funds in his bank account. Petitioner's testimony that he
informed Caplan of the missing $40,000 and of Weisberger's checks
indicates that Caplan was unaware of these items and that
petitioner had great control over this scheme. Without any
evidence to support petitioner's position that he was holding the
proceeds as Caplan's agent or as the dealership's agent, we must
find that the proceeds from the illegal car sales were income to
petitioner. As petitioner has not shown respondent's figures to
be incorrect, we hold that the net proceeds are taxable income
to petitioner.
Stables' Income
Respondent has calculated the Stables' income for the
taxable year 1967 and attributed it to petitioner as a dividend.
Petitioner contends that respondent has not allowed for all of
the Stables' expenses, that he was not an owner of the Stables by
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