- 36 -- 36 -
reliability of petitioner's testimony. It was not only self-
serving, but it also was at times inconsistent with other evi-
dence in the record. As for the stipulations about petitioners'
payments to, or on behalf of, K & H, we do not believe those
stipulations necessarily support, let alone conclusively prove,
petitioners' contention that during the years at issue they were
holding K & H's funds for K & H's purposes.25 Indeed, the record
(1) shows that petitioner was not even authorized to deposit K &
H's construction loan proceeds into petitioners’ accounts during
those years and (2) is silent as to (a) whether petitioner was
authorized to deposit K & H's checking account and credit line
funds into petitioners' accounts;26 (b) whether or how such funds
were disbursed during each of the years at issue; and (c) whether
petitioners were authorized to retain any portion of such funds
24(...continued)
about the nature of any such transactions.
25 Under petitioners' contention, funds otherwise includible in
a taxpayer's income under the principles of James v. United
States, supra, would never be so included as long as such funds
are ultimately repaid. That is because, according to petition-
ers, repayment shows that the taxpayer was holding the funds for
the purposes of the person from whom they were obtained.
26 We find it hard to believe that petitioner would have been
authorized to deposit into petitioners' accounts funds from K &
H's checking account and credit line or to retain any portion of
those funds for petitioners' own use when he was not authorized
to deposit K & H's construction loan proceeds into their accounts
or to retain any portion of those deposits for their own use.
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