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Petitioners increased their borrowings by $55,000 in late
1992 or early 1993, when they claim to have had a cash hoard in
Jack’s safe. We believe that this circumstance also undermines
their contention of a cash hoard; absent any explanation to the
contrary, we find it unlikely that petitioners would incur an
additional $55,000 in debt if they had $125,000 cash in Jack’s
safe. Furthermore, we doubt that petitioner, being liable for a
$135,000 mortgage note, would have turned the proceeds over to
his father and yet have so little recollection of the
circumstances and so little regard for the ultimate disposition
of the funds. We also find it unlikely that Jack would be unable
to remember where he found a bank willing to accommodate his
desire to be paid $135,000 in $100 bills on a third-party check.
C. Other Attacks on Respondent’s Net Worth Analysis
1. Accounts Receivable
Petitioners argue alternatively that even if (as we have
held) respondent permissibly used the net worth method, its
component parts are, in a number of respects, incorrect. On
reply brief, petitioners argue that “Respondent’s net worth
[analysis] should not have included accounts receivables for
Petitioner’s car business since Petitioners are on a cash basis
accounting method as shown on all three tax returns in question.”
7(...continued)
closing net worth balances for each year in issue. Thus, even if
the value of the 1037 Parham Place property were understated in
the net worth analysis, there would be no effect on the amount of
unreported income determined for each year.
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