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testified that he borrowed from his father in 1990 because he
“was short on cash”. Borrowing money and incurring interest
charges are inconsistent with sitting on a large amount of
unproductive cash. Thomas v. Commissioner, 223 F.2d 83, 88 (6th
Cir. 1955), revg. a Memorandum Opinion of this Court; Daniels v.
Commissioner, supra.
Fourth, Mr. Strong’s prior years’ tax returns are
inconsistent with his claim that the cash hoard came from
previously taxed income. From 1981 through 1989, he reported
taxable income of $59,789, an average of $6,643 per year.2 The
largest taxable income he reported was $24,184 in 1981, and in
1984, 1985, 1987, 1988 and 1989, he reported zero taxable income.
This was at the same time he was supporting three children. Mr.
Strong’s reported income from 1981 to 1989 is not sufficient to
live on, much less accumulate a large cash hoard. See Holland v.
United States, supra.
Finally, Mr. Strong filed for chapter 7 bankruptcy
protection in March 1990. In his bankruptcy case, he represented
that the sum total of his assets equaled $33,500, including his
homestead valued at $30,000. He alleged he had no cash on hand
and no interest in any corporation. These representations
plainly contradict his current assertion that his cash deposits
during the years at issue were from cash on hand at the beginning
2SCC reported no taxable income during this same period.
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