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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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Last modified: March 27, 2008