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1989 of $400 from Douglas B.; and in 1990 of $225 from Jerrold
M., $200 from William C., and $140 from Takero O., but we do not
otherwise sustain respondent’s determinations with respect to
these individuals.
Respondent determined that petitioner had unreported escort
income of $500 from Raj International in 1990. Although
petitioner endorsed and deposited into her account a $500 check
in November 1990 made payable to Real Services by Raj
International, we have found that this amount was a loan to
petitioner which she repaid later that year with funds drawn on
Real Services’ and her personal accounts. Accordingly,
respondent’s determination with respect to Raj International is
not sustained.
III. Whether Petitioner Had Unreported Income From Fraudulent
Loan and Investment Transactions
Respondent determined that petitioner received embezzlement
income in several instances during 1989 and 1990 by taking money,
as “investments” or “loans”, from friends and associates without
any intention of repayment. See, e.g., James v. United States,
366 U.S. 213, 219 (1961) (“wrongful appropriations” constitute
income if acquired with no intent to repay); United States v.
Rochelle, 384 F.2d 748, 751-752 (5th Cir. 1967) (fraudulent loans
are “wrongful appropriations” within the meaning of James v.
United States, supra). We consider each determination
separately.
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