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method and sometimes characterized as the sources-and-
expenditures method, the excess-cash-expenditures method, or the
expenditures test. It differs from the "classic" cash
expenditures test in that the latter test ordinarily (but not
always) involves determinations of the taxpayer's changes in net
worth, while the source and application of funds method assumes
that net worth remains the same at the beginning and end of the
taxable period unless the taxpayer shows otherwise. See, e.g.,
Erickson v. Commissioner, 937 F.2d at 1553, affg. T.C. Memo.
1989-552; Petzoldt v. Commissioner, 92 T.C. at 694; DeVennev v.
Commissioner, 85 T.C. 927, 930-931 (1985); Wilcox v.
Commissioner, T.C. Memo. 1992-434, affd. without published
opinion 17 F.3d 1437 (10th Cir. 1994); Jones v. Commissioner,
T.C. Memo. 1983-110; Cox v. Commissioner, T.C. Memo. 1980-244;
Roundtree v. Commissioner, T.C. Memo. 1980-117.
(2) Sources of Funds
As table 4, supra, shows, most of the 1982 sources of funds
are not disputed. The derivation of the capital gains amount is
described in note 1 to table 4. Petitioner should be given
credit for the entire proceeds of his capital transactions, not
merely his capital gains. However, petitioner has not provided
any information from which we could conclude that his basis in
any of the sold items was greater than zero. As a result,
petitioner has failed to show that he should be treated as having
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