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increase this amount. Items attributable to nontaxable sources
decrease this amount. If the resulting figure for the year is
greater than the taxable income reported, then the excess
represents unreported taxable income. See id. at 125. The
Commissioner must establish the opening net worth with reasonable
certainty and show a likely source of unreported income or negate
nontaxable sources. See id. at 132-138; Brooks v. Commissioner,
82 T.C. 413, 431-432 (1984), affd. without published opinion 772
F.2d 910 (9th Cir. 1985).
As of January 1, 1995, petitioners had a zero balance in
their bank accounts. Petitioners testified that they did not
file income tax returns for 1993 and 1994 because they made less
than the amount required to “trigger” the filing requirement.
Mr. Key testified that in 1993 petitioners filed for bankruptcy.
Mr. Key further testified petitioners had absolutely nothing when
they started The Ultimate Comeback. Based on the evidence, we
conclude that respondent correctly began the net worth analysis
with a zero net worth for petitioners as of January 1, 1995.
Respondent then multiplied petitioners’ monthly personal
expenditures for 1995 ($2,586.87) by 12. This totals $31,042.44.
Next, respondent multiplied petitioners’ monthly rental expense
times 12. Respondent adopted $1,190 as the amount of rent. We
found that petitioners paid $1,700 for the first 6 months of 1995
and $1,190 for the last 6 months of 1995. Petitioners’ rental
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