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is based on the assumption that the amount by which a taxpayer's
expenditures during a taxable year exceed his reported income has
taxable origins unless the taxpayer can show that the
expenditures were made from nontaxable sources. DeVenney v.
Commissioner, 85 T.C. 927, 930-931 (1985). A proposed deficiency
based on the use of the source and application of funds method is
presumed correct, and the taxpayer bears the burden of showing
that the reconstruction of income through such method does not
accurately reflect income. Price v. United States, 335 F.2d 671,
677-678 (5th Cir. 1964). To meet his burden, the taxpayer must
prove either that someone else made the expenditures or that the
funds used were obtained from nontaxable sources such as loans,
inheritances, or assets on hand at the beginning of the taxable
period. DeVenney v. Commissioner, supra at 931
In Holland v. Commissioner, 348 U.S. 121 (1954), the Supreme
Court limited the Commissioner's use of the net worth method of
restructuring income by requiring the Commissioner to track down
relevant leads furnished by the taxpayer which are reasonably
susceptible of being checked and by requiring the Commissioner to
show that increases in net worth are attributable to currently
taxable income. In DeVenney v. Commissioner, 85 T.C. at 931, we
held that such limitations were applicable to cases involving the
cash method. In Meier v. Commissioner, 91 T.C. 273, 296 (1988),
however, we stated that "Before the safeguards in Holland are
triggered, the [taxpayer] must either explain the source of or
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