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the notice of deficiency regarding either the alleged loans or
the corporate source of deposits to constitute substantiation of
petitioners' position regarding nontaxability of the deposits.
We recognize that in utilizing the bank deposits method,
respondent was required to investigate any leads regarding
nontaxable sources of income that were "reasonably susceptible of
being checked". See Holland v. United States, 348 U.S. 121, 135-
136 (1954). However, we find that respondent's Revenue Agent
Bacino and respondent's Appeals officer reasonably investigated
petitioners' allegations regarding nontaxable sources.
After contacting the alleged lenders, Revenue Agent Bacino
determined that with one exception petitioners had failed to
substantiate the loans. There were no written agreements or
terms for the alleged loans nor was there any evidence of
principal or interest payments towards these loans. Revenue
Agent Bacino thus sought substantiation of these loans by means
of contacting the individual lenders. However, he concluded that
the individuals listed as lenders lacked credibility. He found
no convincing evidence to substantiate the loans, inheritance, or
gifts. In fact, even at this point, after reviewing all of the
supporting documentation presented by petitioners, the Court is
not convinced of the existence of the alleged loans. Cf.
Schneebalg v. Commissioner, T.C. Memo. 1988-563 (without
corroborating evidence, the Court was not convinced based on the
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