- 20 -
from the same bank accounts, petitioner transferred $100,000 to
GSC America and then to GSC, and this $100,000 was apparently
used for GSC’s expenses and investments. With regard to this
total $183,5905 of managed account funds deposited into the bank
accounts in petitioner’s name in 1987, petitioner has met his
burden of proof and has established that such funds were not
misappropriated by him, but were used by him as an agent for GSC.
With regard, however, to $16,410 in managed account funds
deposited in 1987 into the bank accounts in petitioner’s name
that was not used by petitioner to repay managed account
investors, to purchase gold Krugerrands, nor to make a transfer
to GSC, and that was still on deposit in the bank accounts in
petitioner’s name at the end of 1987, petitioner, who has the
burden of proof on this issue, has not adequately established the
nontaxability of such funds. With regard to this $16,410, we
hold for respondent. We are not persuaded that such funds should
be treated as loans to petitioner. We rely primarily on
petitioner’s burden of proof with regard to this $16,410.
$6,033 Claimed Interest Expenses for 1986 and
$108,037 Claimed Legal Expenses for 1987
With regard to the disallowed $6,033 interest expenses
claimed for 1986, petitioner has offered no evidence and has
5 $45,865 plus $37,725 plus $100,000 equals $183,590.
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