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On December 31, 1992, petitioners had cash on hand of
approximately $60,000 and did not possess cash on hand in any
significantly greater amount.2
Petitioners were not mistrustful of banks, and they
maintained several bank accounts and engaged in large numbers of
banking transactions during both 1991 and 1992. Petitioners’ use
of bank accounts included the unusual practice of depositing and
writing numerous checks for small amounts. During 1991 and 1992,
petitioners deposited 22 checks ranging from $0.63 to $23.47, and
also wrote 38 checks ranging from $2 to $9.93.
Mr. Black knew that bank deposits are insured by the Federal
Deposit Insurance Corporation and that he could have earned
considerable sums of interest income, with no risk, if he had
deposited the alleged cash hoard into a bank account.
Petitioners borrowed money and paid interest on loans during
not only 1991 and 1992, but also during prior years when they
allegedly were accumulating their cash hoard. Petitioners
claimed and respondent allowed, Schedule A, Itemized Deductions,
mortgage interest deductions for each of the taxable years 1987
through 1992.
Mr. Black borrowed $9,000 from his office manager, Jeanette
Roberts, and repaid her during the same year that the loan was
made.
2The parties stipulated these facts.
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