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bear the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933).
Issue 1. Underreported Gross Income
Respondent determined that petitioners failed to report
income from the following sources:
Arizona State lottery winnings $1,409
Interest from Valley Bank of Nevada 1,119
Dividend from the Franklin Fund 1,651
Dividend from Dreyfus Worldwide MM Fund 190
Dividend from American Capital Growth 19
Dividend from Value Line Fund 10
Increase to income 4,398
Petitioners do not seriously dispute the fact that they received
and failed to report these amounts. However, in an attempt to
offset this unreported income, petitioners contend that they
erroneously reported a $5,200 loan as income on their Schedule C
for the Registry. The Registry was a business operated by Mr.
Maerki (hereinafter referred to as petitioner) whose purpose was
to raise capital and do consulting work for other businesses.
Petitioner was the only witness who testified at trial. He
testified that $5,200 had been borrowed and produced a printout
of his computerized records showing a $5,200 deposit to the
Registry account with the description "Equipment Loan Other
Income". Petitioners produced no other corroborating evidence of
the transaction such as loan documents. In answer to his
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