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Petitioner did not keep any records of his real estate
development business in 1989. Petitioner reconstructed his
income, personal and business expenses, and nontaxable sources of
funds from his bank books during respondent's audit.
Elwood used the sources and applications method to
reconstruct petitioner's income for 1989. She calculated the
following:
Applications (Disbursements) $1,245,625
Sources 934,183
Excess disbursements $311,442
Amount reported 52,900
Adjustment to income $258,542
II. OPINION
A. Whether Petitioner Is Taxable on $200,000 He Received in
Wire Transfers
1. Whether Aeberhard Lent $200,000 to Petitioner in 1989
Petitioner does not dispute respondent's computations,
except he contends that he borrowed $200,000 from Aeberhard late
in 1989 and another $200,000 in 1990. Petitioner contends that
the 1989 loan was a nontaxable source of funds. Petitioner has
the burden of proving that respondent's determinations in the
notice of deficiency are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
We have found that Aeberhard lent $200,000 to petitioner in
1990, but petitioner has not proven that Aeberhard lent $200,000
to him late in 1989. There is no evidence that Aeberhard made a
wire transfer to him, and there is no debt instrument or other
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