- 42 -- 42 -
United States, 366 U.S. at 219; Mais v. Commissioner, 51 T.C.
494, 498 (1968). In order for funds obtained from another person
to qualify for exclusion from income because the taxpayer was in
essence a borrower from that person who was in essence a lender,
there must be an "agreement between the [lender] and borrower
entailing 'consensual recognition' of an obligation to repay and
exact conditions of repayment." Moore v. United States, supra at
979-980. Such consensual recognition requires that there be
mutual consent. Solomon v. Commissioner, 732 F.2d 1459, 1461
(6th Cir. 1984), affg. per curiam T.C. Memo. 1982-603.
Petitioners do not even claim, and the record does not support a
finding that, petitioner entered into such an agreement with
either K & H or Ms. Velilla.
Based on our review of the entire record before us, we find
that petitioners have failed to establish that the deposits of K
& H's funds and Ms. Velilla's funds during each of the years 1989
and 1990 that were not returned during each of those years, viz.,
deposits of $90,666.35 and $60,168.06 during 1989 and 1990,
respectively, are not taxable to petitioners.29
29 Petitioners also argue that no portion of K & H's funds that
petitioner deposited into petitioners' accounts during the years
at issue is income to petitioners because (1) in the lawsuit that
Mr. Kabeiseman instituted around 1991 against petitioner, Mr.
Kabeiseman made no allegation of misappropriation; and (2) the
settlement payment of $37,500 by petitioner to Mr. Kabeiseman in
connection with that lawsuit encompassed a payment in settlement
of any such dispute between Mr. Kabeiseman and petitioner. We
disagree. On the record before us, we find that the omission of
(continued...)
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