Frank H. and Marla C. Black - Page 21




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          petitioners or any of their representatives claim that the net              
          worth adjustments could be explained by the use of a large cash             
          hoard.                                                                      
               Petitioners did not raise any cash hoard defense in either             
          their petition or their reply.  Petitioners first raised their              
          cash hoard defense only after this case initially was set for               
          trial in Winston-Salem, North Carolina, on May 23, 2005.                    
               Petitioners have failed to identify any source of funds for            
          the cash hoard other than supposed savings over a number of                 
          years.  On the July 26, 1985, consumer loan application to Home             
          Federal, petitioners stated that they possessed “Cash on hand and           
          in banks” totaling $9,000.  During Agent Helton’s examination of            
          petitioners 1987 through 1989 taxable years, petitioners failed             
          to identify any large quantities of cash on hand.  At trial, Mr.            
          Black testified that he had lied to Agent Helton.                           
               Furthermore, all of the expenditures in respondent’s net               
          worth calculations are by check or credit cards eventually paid             
          by check.  Also, there is no evidence of large cash deposits into           
          petitioners’ bank accounts.  Thus, even if petitioners had a cash           
          hoard, it would not affect the net worth calculations as there is           
          no evidence that any of the expenditures were paid by cash either           
          directly or through deposit and payment by check.                           










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