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to show error in respondent’s determination that unexplained
increases in petitioners’ net worth are attributable to
unreported taxable income. That is to say, respondent’s net
worth analysis is wholly compatible with (and partly predicated
on) an assumption that petitioners might have realized more
income than they consumed through “private expenditures.”
3. The Cash Hoard “Lead”
Finally, petitioners contend that respondent failed to make
a reasonable investigation of the “lead” that their 1993
beginning net worth, as reflected in respondent’s net worth
analysis, incorrectly omitted $125,000 in cash, which petitioners
allege they had in Jack’s safe as of January 1, 1993. There is
no evidence as to when petitioners may have provided respondent
this “lead”, which is predicated almost entirely on petitioner’s
and Jack’s testimony at trial. Hence, there is no basis to
conclude that respondent would have had reason to investigate
such a “lead” in the course of his examination.
In any event, petitioners have failed to show that the cash
hoard existed after 1992, or that, if it did exist, it was a
source of nontaxable income during the years in issue. On direct
examination, Jack testified that after petitioners obtained the
$135,000 Home Federal mortgage loan in June 1992, Monty signed
the check over to him, and that he (Jack) then cashed the check,
although he could not recall where he cashed it. Inconsistently,
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