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Home Federal application, they listed under “ASSETS” a “BRADFORD
MONEY MARKET” account valued at $9,000. On the “PERSONAL
STATEMENT” attached to the Home Federal application, petitioners
stated that they possessed “Cash on hand and in banks” totaling
$9,000.
IRS Revenue Agent Robin Helton (Agent Helton) was assigned
to examine petitioners’ joint returns for the taxable years 1987,
1988, and 1989. Petitioners’ 1987, 1988, and 1989 income tax
returns reported taxable income of $76,332, $44,581, and $26,791,
respectively. Petitioners later agreed to deficiencies for
taxable years 1987, 1988, and 1989.
On May 8, 1990, Agent Helton conducted an initial interview
with Mr. Black in connection with her examination of petitioners
for the years 1987, 1988, and 1989. During that interview, she
questioned Mr. Black about what was the “most cash you had on
hand during the tax year,” to which Mr. Black responded that
petitioners kept no great amounts of cash on hand. At no time
during Agent Helton’s investigation did petitioners ever claim to
have had large amounts of cash on hand.
On February 18, 1987, petitioners received a check of
$69,133.31 from the sale of a residence owned by Mrs. Black,
which they deposited into one of their bank accounts during 1987.
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