Bobby E. Welch - Page 8

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          funds in dispute were derived from nontaxable sources.  Rule                
          142(a); Tokarski v. Commissioner, 87 T.C. 74 (1986); see also               
          Rockwell v. Commissioner, 512 F.2d 882, 885-887 (9th Cir. 1975).            
          We turn to an examination of the facts concerning the two alleged           
          sources of the deposits.                                                    
          Funds From Mr. Zurn                                                         
               Petitioner's relationship with Mr. Zurn may be described as,           
          to say the least, confusing.  Indeed, there is even confusion as            
          to when petitioner and Mr. Zurn became associated.  Petitioner              
          testified that he met Mr. Zurn in 1984.  However, in a prior                
          trial involving Mr. Zurn's tax liabilities, petitioner testified            
          that they became associated in 1987, or possibly 1986.  This date           
          is important because petitioner alleges that he received funds              
          from Mr. Zurn in 1985 and 1986 to construct an apartment building           
          (referred to herein as the Montrose property).  Petitioner's                
          version of the events, however, is questionable in light of a               
          loan application dated July 14, 1986, in which petitioner stated            
          that he was receiving monthly rental income from the Montrose               
          property in the amount of $5,640.  Finally, there is the peculiar           
          grant deed dated August 2, 1985, purportedly conveying the                  
          Montrose property to Mr. Zurn and a John Nuckols.  Petitioner               
          testified that at the time he conveyed the property to Messrs.              
          Zurn and Nuckols, Mr. Zurn had advanced at least $50,000 to                 








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