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subtracted from this amount known deposits, including CDs that
petitioners had liquidated.
Petitioners made an attempt to explain the source of funds
in their bank accounts. Mr. Possas testified that they had
purchased CDs at First Union Bank and cashed them in to use as a
downpayment on a house that they purchased in 1995. Mr. Possas’s
testimony was vague. The bank records that petitioners produced
to the Court, which purportedly show that the CDs they liquidated
were deposited into their bank accounts, do not clearly account
for the deposits. We are not convinced that petitioners cashed
in CDs in excess of $7,064, which is the amount that respondent
identified and gave petitioners credit for in calculating
unreported income. See Clayton v. Commissioner, supra at 646.
Petitioners provided a copy of Mrs. Possas’s appointment
book that reflects the 347 hairdressing appointments in 1996 and
also indicates many of the services performed for her clients.
Mrs. Possas testified as to the prices of the various services
she performed. Thus, there is a basis in petitioners’ records
for an estimate of their income, if not precise as to the total
amount of income, then at least accurate with respect to those
known appointments. Petitioners made no effort, however, to
calculate their income from the hairdressing activity.
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