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jewelry could have been in the safe that Jack White stole.
Therefore, we conclude that it is not reasonable to include the
$30,000 cash and $100,000 jewelry as applications of funds for
1990 merely on the circumstance that Frank and Katherine reported
their theft to the police. Accordingly, we hold that Frank and
Katherine’s applications of funds for 1990 must be reduced by
$130,000 to account for the exclusion of that cash and jewelry.
8. Summary Relating to Amount of Understatement of Income
Taking into consideration the foregoing adjustments to
respondent’s source and application of funds analyses for Frank
and Katherine, Larry, Ronnie, and Sylvia for the years in issue,
our computations show that Frank and Katherine had excess
applications of funds over sources of funds in the following
amounts:
Year Amount
1983 $80,350
1984 80,253
1985 87,757
1986 90,989
1987 145,303
1988 193,387
1989 119,017
1990 92,609
Total 889,665
See infra Appendix K for our revisions to the source and
application of funds analysis for Frank and Katherine for the
years in issue. See infra Appendices L, M, and N for our
revisions to the source and application of funds analyses for
Larry, Ronnie, and Sylvia, respectively, for those years.
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