Mercedes Arcia - Page 11

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          curiam without published opinion 929 F.2d 702 (6th Cir. 1991).               
          Furthermore, amounts received as to which a taxpayer is acting as            
          an agent or conduit are not required to be reported as income.               
          Goodwin v. Commissioner, 73 T.C. 215, 230 (1979); see also Liddy v.          
          Commissioner, supra.  As we stated in Diamond v. Commissioner, 56            
          T.C. 530, 541 (1971), affd. 492 F.2d 286 (7th Cir. 1974):  "We               
          accept as sound law the rule that a taxpayer need not treat as               
          income moneys which he did not receive under a claim of right,               
          which were not his to keep, and which he was required to transmit            
          to someone else as a mere conduit."                                          
               Petitioners have the burden of proof on this issue, Rule                
          142(a); Welch v. Helvering, 290 U.S. 111 (1933), and resolution of           
          the issue depends upon our believing petitioner's explanation that           
          he was acting as an agent for Mr. Macias--in essence, holding Mr.            
          Macias' money for safekeeping--and that no portion thereof was used          
          for petitioners' personal benefit.  Accordingly, we must distill             
          truth from falsehood.  See Diaz v. Commissioner, 58 T.C. 560, 564            
          (1972).                                                                      
               Although the facts herein may seem improbable, we believe them          
          to be true.  As acknowledged by respondent, this case hinges on the          
          credibility of the witnesses.  We found Messrs. Morera, Chavez, and          
          petitioner to be credible witnesses.  We especially found Mr.                
          Chavez to be trustworthy, along with the notations in his diary.             
          Mr. Macias' affidavit and Agent Swaffort's testimony confirm the             





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