- 12 -
were the source of petitioner's unexplained deposits for any of
the years in question. Even accepting the alleged unusual
business habits of both, we cannot accept that some $700,000 in
loans exchanged hands. It is clear that funds did flow between
Mr. Zurn and petitioner, but it is also clear that petitioner
performed services for Mr. Zurn. We do not know the reasons for
many of the transfers. At least in the case of the funds
involved on the so-called Lot 2160 transaction, while we do not
know details of the transaction, it certainly appears that from
petitioner's position some type of taxable transaction took place
and that transaction was not reported on petitioner's tax return.
While it may be that Mr. Zurn did lend petitioner money, the
paucity of records of both Mr. Zurn and petitioner makes it
impossible to separate the possible wheat from the definite chaff
in the transfers of funds between the two. Accordingly, we
sustain respondent's determinations based on the bank deposit
analyses for all the years at issue.10
The Accommodation Deposits
During 1987 through 1989, Mr. Zurn and petitioner were
engaged in some type of an alleged export activity under the name
10 There are other peculiarities. For example, the gross
income on petitioner's 1986 Schedule C reflects $751,169 and a
net profit of $7,713. In an income statement prepared by Mr.
Moore for the first 9 months of 1986, petitioner's gross income
was shown to be $853,122 with a net profit of $108,058. While
Mr. Moore prepared the income statement, he did not prepare the
1986 tax return.
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