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Fuels account at Founders Bank does not constitute income
to petitioners.
Deposit Into H&B's Community Bank Account
On August 25, 1988, petitioner signed check No. 1241
drawn on H&B's First Interstate account and made payable to
Community Bank in the amount of $1,500. A note attached to
the check in Ms. Melba Petty's handwriting states: "Don
says travel expense & repairs note: Deposited in H&B acct
1st Com Bank #252641". The proceeds of this check were
deposited into H&B's account at Community Bank.
Respondent determined that amounts deposited into
H&B's account at Community Bank constitute income to
petitioners because petitioner was the only person
authorized to withdraw funds from the account. See
generally Bailey v. Commissioner, 52 T.C. 115 (1969), affd.
420 F.2d 777 (5th Cir. 1969). Petitioners argue that the
money deposited into this account does not constitute
income to them because the account was established and used
for H&B's business purposes. However, petitioners have not
shown that money in the Community Bank account was ever
used to satisfy expenses incurred on behalf of H&B, or that
the money deposited into the account belonged to H&B. At
trial, petitioners introduced a document purporting to
authorize Mr. Petty to sign checks drawn on the Community
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