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We are unpersuaded by petitioners' arguments and assertions
on this issue. Mr. Osherow testified credibly that he never
loaned any money to the Evanses, and that Mr. Evans considered
the royalties to be his income. Based on this testimony, we find
that Mr. Osherow never reported the royalties as income on the
estate's tax returns. We hold for respondent on this issue.2
2. Unreported Income
Respondent determined that petitioners did not recognize
income that they realized in 1989 when Mr. Evans sold the cattle.
Petitioners assert that the cattle were sold by Mr. Evans'
secured creditors, and, hence, that the income was not
petitioners'.
We are unpersuaded by petitioners' argument and assertion on
this issue. The record reveals that Mr. Evans sold the cattle
and deposited the proceeds into his personal bank account.
Petitioners attempt to explain away this evidence by asking the
Court to find as a fact that Mr. Evans sold the cattle as an
2 Petitioners misconstrue that 1983 through 1987 fiduciary
income tax returns that were prepared for the "Bankruptcy estate
of Robert & Linda Evans", in asserting that Mr. Osherow should
have known before the settlement that the royalties belonged to
the estate. The settlement was reached in 1989, and all these
returns were prepared on or after July 26, 1991. The record does
not indicate that these returns were ever filed with the
Commissioner. When we view these returns in the light of
petitioners' amended returns for the same years, we conclude that
the fiduciary and amended returns were merely an attempt by
petitioners to have the royalty income taxed to the estate at a
rate of tax that was lower than that imposed on their own income.
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