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including inconsistencies in their testimony, we do not find Mr.
Yang or Fang Long Yang to be credible with respect to this issue.
Petitioners’ explanation for the bank deposits is that all
of the money deposited was the proceeds of gifts. Petitioners
testified that neither of them was gainfully employed or engaged
in business after Mr. Yang discontinued his employment at Hughes
Aircraft.
However, in their loan applications, signed under penalty of
perjury, petitioners told a different story. They reported
earning substantial amounts of business income, and Mr. Yang was
classified as self-employed. The Bank of Taiwan account was
referred to as a “business account”,7 Mr. Yang admitted spending
an increasing amount of time overseas for work, and he stated
that he had manufacturing clients in Taiwan. Petitioners claim
that they misrepresented their financial information on the loan
applications in order to get the loans approved and inadvertently
failed to disclose the Bank of Taiwan account on their income tax
returns. Based on the contradictory evidence, we do not find
petitioners’ explanations to be persuasive. Accordingly, with
the exceptions noted below, we hold that the amounts deposited
into petitioners’ bank accounts in 1995 and 1996 are taxable
income.
7Petitioners failed to report their interest in the Bank of
Taiwan account on their 1995 and 1996 tax returns.
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