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Commissioner, supra at 647; Rowlee v. Commissioner, 80 T.C. 1111,
1123 (1983).
As indicated, respondent argues that all managed account
funds deposited into bank accounts in petitioner’s name during
the years in issue should be treated as unreported taxable income
to petitioner. Respondent argues that by depositing managed
account funds into bank accounts in his name, petitioner
misappropriated managed account funds from either the managed
account investors, from GSC, or from both.
Petitioner argues that managed account funds deposited into
bank accounts in his name constituted loans from managed account
investors to GSC, that petitioner did not misappropriate any
managed account funds either directly or through GSC, and that
petitioner used managed account funds deposited into bank
accounts in his name as an agent for GSC, and to pay expenses and
to make purchases of securities on behalf of GSC.
The evidence before us establishes that, from the standpoint
of managed account investors and GSC, managed account funds
transferred by investors to GSC, to petitioner, and to Gomez,
were regarded as funds loaned from the investors to GSC. Managed
account investors signed written agreements with GSC that
provided for repayment of principal and interest, and managed
account investors did expect to be repaid all managed account
funds and interest thereon. The fact that some officers and
employees of GSC did not know of the managed account funds does
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