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The Michoff, Srs., made deposits into their Placer savings
account in the amounts of $6,200 and $4,600 which are in issue in
the 1989 and 1990 tax years, respectively. These deposits do not
make up the total amount of deposits into this account in 1989
and 1990. Some of these deposits were part of larger deposits.
The Michoff, Srs., made a payment on their Bank of America
Visa account in the amount of $4,472.64 on August 18, 1989.
Respondent contends that the above deposits and expenditures
are from unreported income of the Michoff, Srs. The Michoff,
Srs., contend that the amounts at issue came from the following
sources: “insurance refund”, “cash reserve”, "gambling winnings
equal losses”, “withdrawn and replaced from accounts”, “cash
withdrawn and replaced”, “refund”, “repayment of loan to Michael
Michoff”, and “transfer from Golden Union #1". The Michoff,
Srs., argue that Beverly Michoff had saved money over many years
and hid it from her husband because he had a gambling problem.
They contend that many of the deposits in issue came from this
cash reserve. Beverly Michoff testified that at one time she had
almost $100,000 in cash in a can. Petitioners argue that some of
the cash reserves came from a personal injury settlement of
Michoff, Sr. Beverly Michoff testified that around 1971 they
received approximately $60,000 in settlement of the back injuries
of Mr. Michoff, Sr. No documentary evidence was presented
regarding the personal injury settlement, and Beverly Michoff's
testimony in this regard was vague. Beverly Michoff testified
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