James E. and Chung H. Peacock - Page 33

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               We do not believe that the $90,000 was stolen from                     
          petitioners.  The record gives us several grounds on which to               
          doubt petitioner-wife's credibility.  Petitioners concede that Il           
          Nam Lee never gave them any money.  Petitioners contend that                
          petitioner-wife was referring to petitioner-husband's mother, not           
          her own mother.  We find that to be an implausible attempt to               
          evade the effect of her prior reference to her mother.                      
          Petitioner-wife admits to giving false information to U.S.                  
          immigration officials to help Suil Peacock and K.C. Urbon                   
          immigrate to the United States.  She testified that she never saw           
          any of the financial records from the saunas, but she received              
          the sheets and the money when petitioner-husband was in jail in             
          1987.  We are not convinced that $90,000 was stolen from                    
          petitioners in January 1985.                                                
               5.   Petitioners' 1985 Personal Expenditures                           
               Respondent concedes that petitioners gave Suil Peacock                 
          $48,940 in 1985, instead of $74,000 (a reduction of $25,060) as             
          respondent determined in the notice of deficiency.5  Petitioners            
          contend that respondent's $25,060 concession results in an                  
          overpayment for 1985.  We disagree.  Respondent did not include             
          petitioners' living expenses in respondent's net worth                      
          calculation and contends that this offsets respondent's                     

               5 Petitioners' net worth is increased by the amount of the             
          funds they transferred to Suil Peacock.                                     





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