- 53 -
read palms during 1988 and 1989 as well as 1990. The TV
commercial Katherine filmed during 1988 also gives the impression
that she continued to read palms over her entire 50-year career
as a palmist. Our review of the whole record leads us to
conclude that Katherine remained actively involved in her
palmistry business throughout all of the years in issue, and we
have so found. Katherine’s palmistry business constitutes a
likely source of funds for the unreported income.
Additionally, the record reveals that both Katherine and
Frank gambled during the years in issue. Thus, the record
supports an inference that gambling provided another likely
source for the unreported income.
Accordingly, we conclude that respondent has proved likely
sources for the unreported income for the years in issue. The
large excess of expenditures over income revealed by respondent’s
source and application of funds analysis for the years in issue
supports respondent’s determination of unreported income absent a
nontaxable source for the expenditures.
(2) Nontaxable Source
Petitioners contend that Frank and Katherine used a cash
hoard Katherine had received from her father during or before
1974 to acquire assets and pay expenditures for themselves and
for Larry, Ronnie, and Sylvia during the years in issue. They
assert that Katherine’s father gave her about $750,000 in cash
Page: Previous 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 NextLast modified: May 25, 2011