-21-
B. Opening Net Worth and Cash on Hand
The parties agree about petitioners' opening net worth for
the years in issue except for the amount of cash they had on hand
on December 31, 1982, 1983, 1984, 1985, 1986, and 1987.
Respondent contends that petitioners had a cash hoard of $140,000
on December 31, 1982. Petitioners contend that they had more
than $660,000 in cash on that date ($250,000 from Wilma
MacFarland, $150,000 from Tobey Peacock, $200,000 from black
market sales and skimming from slot machines in Vietnam, and more
than $60,000 from previously taxed income).
We conclude that petitioners had much less than $660,000 in
cash on hand on December 31, 1982, from the sources they claimed,
but that they had more than respondent determined. As discussed
above at par. A-2, and below at par. B-3-e, we conclude that
petitioners had $279,000 in cash on hand on December 31, 1982,
and $40,000 on December 31, 1983, 1984, 1985, 1986, and 1987.
1. Cash Hoard Sources Asserted by Petitioners
a. Wilma MacFarland
Petitioners claim that they received $250,000 in cash from
Wilma MacFarland. Petitioners claim that the $250,000 includes a
$125,000 loan that Wilma MacFarland made to petitioner-husband on
July 30, 1979, with the understanding that the money would be
repaid on demand without interest, but that any balance due when
Wilma MacFarland died would be considered paid in full. Wilma
MacFarland died a few months after July 30, 1979. Petitioner-
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