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each year in issue, they had cash on hand of $2,500. Assuming
that the stipulation is correct, any cash hoard in excess of this
amount obviously must have been depleted before December 31,
1993, in which case the omission of a cash hoard from the 1993
opening net worth could affect the results of the net worth
analysis, as 1993 expenditures from such a cash hoard would
represent a nontaxable source. Petitioners do not contend,
however, and the evidence does not show, that they expended the
$125,000 (or any specific amount thereof) during 1993.
Petitioners argue that since respondent’s analysis reflects
petitioners’ liability on the Home Federal mortgage loan (as a
liability owed to Home Federal’s successor in interest, First
Tennessee Bank), the net worth analysis must be adjusted to also
include the $125,000 cash proceeds. The fallacy of this argument
is that there is no proof that petitioners retained any cash
proceeds from the mortgage loan after 1992. Even if we were to
assume, for sake of argument, that petitioners at some point in
1992 had $125,000 cash on hand from the mortgage loan, the
evidence does not foreclose the possibility, among others, that
petitioners spent the $125,000 in 1992 on their residential
property at 1037 Parham Place, which was collateral for the
mortgage loan, or on one of their other properties which are
included in the net worth analysis.7
7 The 1037 Parham Place property is included in respondent’s
net worth analysis with a $160,000 value in the opening and
(continued...)
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