-29-
the Tokyo Saunas did not provide funds in 1983 for (1) the
$45,002 expenditure on January 28, 1983; (2) the $100,000
expenditure on April 1, 1983; and (3) the $134,000 petitioners
spent in May 1983 for the Glenstone property. We believe that
the May 1983 amount was paid before petitioners could have saved
enough cash to have paid it from their 1983 earnings. We believe
that petitioners' saunas produced income to make their other
$118,142 of cash purchases in 1983. Where the Commissioner has
determined a deficiency using the net worth method, we may adjust
a determination of opening net worth shown by the trial record to
be unrealistic. Hoffman v. Commissioner, 298 F.2d 784, 786 (3d
Cir. 1962), affg. in part on this issue T.C. Memo. 1960-160;
Baumgardner v. Commissioner, 251 F.2d 311, 313-314 (9th Cir.
1957), affg. T.C. Memo. 1956-112; Potson v. Commissioner, 22 T.C.
912, 928-929 (1954), affd. sub nom. Bodoglau v. Commissioner, 230
F.2d 336 (7th Cir. 1956). Thus, we conclude that petitioners had
cash on hand of $279,000 on December 31, 1982. We also conclude
that petitioners saved most of the $279,000 from unreported
income they received before 1983. Based on our holding, Tokyo
Saunas produced income for petitioners in 1983 of $126,462.
c. Petitioners' Use of Credit Cards
Petitioners contend that respondent did not properly account
for credit card receipts in determining that petitioners had
$40,000 in cash each year because petitioners had to pay the
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