Michael J. Downing and Sandra M. Downing - Page 61

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          explained the $180,000 as a rough estimate.  At trial, he                   
          testified that the correct January 1, 1994, amount was roughly              
          $60,000 to $70,000.  He did not explain in his testimony why his            
          rough estimates at trial differed from his rough estimate to                
          Klimkiewicz by about $110,000 to $120,000.  Nor did petitioners             
          clarify this substantial difference on brief.  (3) On numerous              
          occasions Michael borrowed--sometimes from family and sometimes             
          from business lenders--amounts for short terms and for long                 
          terms.  In the case of borrowings from business lenders Michael             
          incurred substantial interest expenses.  Michael incurred these             
          expenses without seeking to earn income on what he contended were           
          large amounts in his cash hoard.  Because he neither earned on              
          his claimed cash hoard nor used his cash hoard to reduce                    
          borrowings when opportunities were presented, it is evident that            
          Michael’s actions were not significantly affected by any                    
          evaluation of opportunity cost.                                             
               (iii)  Analysis                                                        
               In DeVenney v. Commissioner, 85 T.C. 927, 933 (1985), we               
          stated that--                                                               
               we cannot fail to note that the existence of a cash                    
               hoard is endlessly claimed by taxpayers to explain the                 
               existence of otherwise unexplained sources of funds.                   
               It is rare indeed that a taxpayer successfully proves                  
               this contention.                                                       
          In DeVenney, the taxpayers’ evidence prevailed completely; not              
          only did it overcome the Commissioner’s fraud contentions, but it           







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