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applications of funds. Accordingly, we find that the source and
application of funds analyses for Ronnie and Sylvia should be
adjusted to exclude those duplicated expenses. See infra
Appendices M and N for the amount of those adjustments.
c. Depreciation
Ronnie claimed depreciation expenses on his Schedules C for
1989 ($10,350) and 1990 ($700). In Ronnie’s source and
application of funds analysis for 1989, respondent reduced
applications of funds by the amount of depreciation claimed on
his Schedule C, but respondent made no adjustment for
depreciation for 1990. See infra Appendices H and I. Respondent
did not explain why depreciation was not excluded from
applications of funds for 1990. We believe that the adjustment
should be made, and accordingly hold that Ronnie’s application of
funds analysis for 1990 should be reduced by $700 to account for
this item.
d. Cash and Jewelry
Respondent included $30,000 cash and $100,000 jewelry as
applications of funds in the source and application of funds
analysis for Frank and Katherine for 1990. See infra Appendix A.
Those items constitute the cash and jewelry that Frank and
Katherine reported to the police were in their safe when Jack
White burglarized their home during 1990. Respondent contends
that, if Frank and Katherine did not have the $30,000 cash and
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