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returns for 1989 and 1990 other than those agreed to by the
parties in their stipulation. Respondent asserts that the sole
unagreed nontaxable source, the alleged cash gift, has been
negated. Petitioner argues that the unreported amounts deposited
and expended in 1989 and 1990 were not includable in income
because he was spending cash on hand at the beginning of 1989,
cash that he claims was given to him by his great-grandfather in
1976.
In United States v. Massei, 355 U.S. at 595, the Supreme
Court stated that "should all possible sources of nontaxable
income be negatived, there is no necessity for proof of likely
source." However, in Commissioner v. Thomas, 261 F.2d 643, 646
(1st Cir. 1958), revg. and remanding T.C. Memo. 1957-244, the
Court of Appeals for the First Circuit noted that the
burden of negating is not so broad as it sounds, for
* * * the only source of nontaxable income which the
taxpayers have contended accounts for taxpayers'
increases in net worth, as we said, was a substantial
cash gift * * *. It follows that * * * only that
source needs to have been negated. [Emphasis added.]
See also United States v. Hiett, 581 F.2d at 1201; Kramer v.
Commissioner, 389 F.2d 236, 238 (7th Cir. 1968), affg. T.C. Memo.
1966-234; Gatling v. Commissioner, 286 F.2d 139, 144 (4th Cir.
1961), affg. T.C. Memo. 1959-224; Parks v. Commissioner, 94 T.C.
at 660; Boggs v. Commissioner, T.C. Memo. 1985-429.
We conclude that respondent may satisfy the burden of proof
on this issue by negating petitioner's alleged nontaxable cash
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