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States, 591 F.2d 1243, 1245 (9th Cir. 1978); Clayton v.
Commissioner, supra; DiLeo v. Commissioner, 96 T.C. 858, 869
(1991), affd. on other grounds 959 F.2d 16 (2d Cir. 1992); Parks
v. Commissioner, supra.
Petitioner contends that some of the funds that she
deposited in her bank accounts were not taxable to her because
those funds belonged to the photo shop and not to her. She
contends that, as a favor to the photo shop, she deposited photo
shop funds in her bank accounts at the close of the day and
withdrew them the next business day to return those funds to the
photo shop. We disagree.
Petitioner’s testimony is the only evidence supporting her
contention. We decide whether a witness is credible based on
objective facts, the reasonableness of the testimony, and the
demeanor and consistency of statements made by the witness.
Quock Ting v. United States, 140 U.S. 417, 420-421 (1891); Wood
v. Commissioner, 338 F.2d 602, 605 (9th Cir. 1964), affg. 41 T.C.
593 (1964); Pinder v. United States, 330 F.2d 119, 124-125 (5th
Cir. 1964); Concord Consumers Hous. Coop. v. Commissioner, 89
T.C. 105, 124 n.21 (1987). We may discount testimony which we
find to be unworthy of belief, but we may not arbitrarily
disregard testimony that is competent, relevant, and
uncontradicted, Conti v. Commissioner, 39 F.3d 658, 664 (6th Cir.
1994), affg. and remanding on another ground 99 T.C. 370 (1992)
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