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there was an understatement for 1991, and the existence of an
understatement for 1990 depends on whether the two identified
items were income, as respondent contends, or loans, as
petitioner contends. As a result of the stipulation, the
validity of respondent's indirect method of reconstructing
petitioner's taxable income is not genuinely in dispute.
Petitioner asserts that respondent has not satisfied her
burden of proof because she did not investigate all of the
possible nontaxable sources of funds, specifically the alleged
loans from Mexico. We agree that respondent may not disregard
explanations of petitioner that are reasonably susceptible of
being checked. "But where relevant leads are not forthcoming,
the Government is not required to negate every possible source of
nontaxable income, a matter peculiarly within the knowledge of
the defendant." Holland v. United States, supra at 138.
Petitioner was not forthcoming with relevant leads.
Petitioner did not offer to respondent the explanation that the
understated income was attributable to loans until well into the
audit. Once petitioner claimed that the source of the income was
loans, petitioner gave respondent inconsistent explanations of
the source of the loans. Petitioner alternated between asserting
that the loans were from Mexican companies or from his wife, from
whom he has been separated for 20 years. Petitioner, through
Bradley, did not provide any substantiation to support the loans
until approximately 2 years after the audit began. The timing of
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