- 25 -
computations.17 Weimerskirch v. Commissioner, supra at 361; see
also Hobart v. Commissioner, T.C. Memo. 1995-517. But, the
required showing of an evidentiary linkage is only "minimal",
Blohm v. Commissioner, supra at 1549 (citing Carson v. United
States, 560 F.2d 693, 697 (5th Cir. 1977) (quoting Gerardo v.
Commissioner, 552 F.2d 549, 554 (3d Cir. 1977), affg. in part and
revg. in part T.C. Memo. 1975-341)), and petitioner's admitted
participation in money laundering on Ben's behalf clearly
provides such a linkage. Petitioner's admission establishes not
only that he was linked to illegal activity, but that he received
income from that illegal activity. Much of the funds that flowed
through Safra and Barnett money market in 1985 and 1986 came from
the card club through LCP Associates.
Because of the "obvious intent of that Congress to tax
income derived from both legal and illegal sources, to remove the
incongruity of having the gains of the honest laborer taxed and
the gains of the dishonest immune", funds from illegal sources
have long been considered taxable income. James v. United
States, 366 U.S. 213, 218 (1961) (quoting Rutkin v. United
States, 343 U.S. 130, 138 (1952)). However, in James v. United
17As discussed supra pp. 20-22, respondent did not
substantiate her deficiency calculations and stipulated evidence
that would support different--although not necessarily smaller--
amounts. But the evidence does substantiate the order of
magnitude of the IRS computations. The differences are
relatively insignificant (the biggest discrepancy is the $75,200
understatement by the statutory notice of deficiency for 1986 and
1987 as compared to the bank records, which is less than 10
percent of the actual deposits of $849,128).
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