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Petitioners contend that Frank and Katherine did not have
any likely source for the unreported income in the amounts
determined by respondent. Petitioners assert that Frank was
retired and seriously ill for all of the years in issue, and his
only source of income was Social Security benefits. Petitioners
further assert that Katherine’s palmistry business could not have
generated the substantial receipts needed to produce the
unreported income calculated by respondent for the years in
issue. They maintain that she was seriously ill much of that
period, and she was retired between January 1986 and August 1990
during which period her only income was Social Security benefits.
They further maintain that Frank accurately reported his gambling
winnings. As for the loan applications, petitioners argue that
the applications were prepared by third parties, and that there
is no documentary evidence to support the claim that Frank worked
as a real estate broker for the years in issue.
We believe that petitioners paint an overly dramatic picture
of Frank’s and Katherine’s health conditions for the years in
issue. In our opinion, the record does not show that Frank and
Katherine were too ill to conduct the activities that would
generate income from two of the likely sources identified by
respondent (i.e., palmistry and gambling), and we have made
findings that they did conduct those activities during the years
in issue. The testimony of Dr. Kerry M. Schwartz, M.D. (Dr.
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