Rene D. and Rosemary S. Valdes - Page 6

                                        - 5 -                                         
          beginning of the tax year.  Petzoldt v. Commissioner, supra at              
          695; Burgo v. Commissioner, supra at 743.                                   
               At one time, petitioner asserted that the unreported income            
          represents nontaxable loans or gifts from his mother in the                 
          approximate amounts of $7,000 and $49,000 for the 1996 and 1997             
          taxable years, respectively, and $4,000 from his aunt.4  At                 
          trial, however, he did not testify as to any specific amounts               
          that he received.  As discussed, according to petitioner, his               
          mother and aunt sold capital assets and gave the proceeds to him            
          in the form of either cash or cashier’s checks, and he used these           
          funds to pay his personal expenses.  Petitioner, however, did not           
          provide any documentation to substantiate these purported loans             
          or gifts.  The record is devoid of any loan agreements; Form                
          1099-B, Proceeds from Broker and Barter Exchange Transactions,              
          relating to his mother’s or aunt’s sale of capital assets; or the           
          alleged cashier’s checks.  See Wynn v. Commissioner, T.C. Memo.             
          1996-415.  Additionally, upon examination of respondent’s                   
          financial information concerning petitioner’s mother and aunt for           
          1995, 1996, and 1997, it does not appear that either had the                
          financial capability to make such large loans or gifts to                   
          petitioner.5  See Holland v. United States, 348 U.S. 121, 135-137           

               4  We note that except for 1997, even if these amounts are             
          correct, there still are substantial understatements of income.             
               5  From respondent’s summary of records, it appears that               

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