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NHIL maintained a Meridian bank account (NHIL account), and
petitioners deposited $442,623.33 into the account in 1996. Of
these deposits, $8,800 were nontaxable insurance proceeds and
nontaxable transfers from other bank accounts controlled by
petitioners. NHIL filed a Form 1120, U.S. Corporation Income Tax
Return, for 1996. NHIL reported gross receipts of $247,743.79
and taxable income of $290.37. Thus, in 1996, NHIL had total
unexplained deposits of $186,079.54.
NHIL received four payments totaling $24,180 in 1996 from
Green Tree Financial Servicing Corp. (Green Tree income). These
payments were not deposited into the NHIL account or any other
account controlled by petitioners.
Personal Finances
On November 21, 1995, petitioners purchased a house for
$681,000 in Ottsville, Pennsylvania. Petitioners secured a
mortgage on the property through GE Capital Mortgage Corp. In
order to qualify for the mortgage, petitioners completed a
mortgage application, reporting a base monthly income of $14,860
from NHIL.
Petitioners maintained two accounts with Union National Bank
during 1996. One account was titled “Nationwide Home Remodelers
Group, Bradley Mark Cohen” (Nationwide account), and the second
was titled “Bradley Mark Cohen or Kathy Cohen” (Cohen account).
In 1996, petitioners deposited $16,017.50 into the Nationwide
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