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petitioners' income for each of the years at issue, as we stated
above, the deposits at issue are prima facie evidence of income,
and petitioners bear the burden of proving that those deposits
are not taxable.22 See Calhoun v. United States, 591 F.2d at
1245; Marcello v. Commissioner, 380 F.2d at 511; Tokarski v.
Commissioner, 87 T.C. at 77. As we understand petitioners'
position, they contend that no portion of the deposits into
petitioners' accounts of (1) K & H's construction loan proceeds,
checking account funds, and credit line funds and (2) Ms.
Velilla's construction loan proceeds and checking account funds
is includible in their income for each of the years 1989 and 1990
because petitioners held those deposits "for corporate purposes
and subject to an obligation which Mr. Harp recognized to return
the funds to the corporation." Respondent disagrees with those
contentions, arguing that those deposits represent funds misap-
propriated by petitioner and that, to the extent that during each
of the years at issue petitioners did not use those deposits
during each such year to make payments to, or on behalf of, K & H
and Ms. Velilla, they are taxable to petitioners under the
principles of James v. United States, 366 U.S. 213 (1961).
Regardless whether petitioner's actions during the years at
issue regarding K & H's and Ms. Velilla's funds are characterized
22 As noted above, the parties agree that petitioners' returns
for 1989 and 1990 did not include as income any of the deposits
during each of those years of K & H's and Ms. Velilla's funds.
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